While your institution likely approaches the big bank vs little bank debate with your business clients from the standpoint of offering quality customer service, have you thought about attracting more business customers through your product offering? Many smaller institutions are beginning to generate additional fees through additional lines of service.
An article on Independent Banker specifically discusses how to generate additional income by marketing ACH origination as a service. Its author noted that Florida Capital Bank, a $300 million-asset community bank in Jacksonville, Florida, generated additional income from residential mortgage lending, small-business and government lending, health savings accounts, and electronic banking. The electronic banking plan focuses on ACH business, marketing to third-party payment senders and high-volume ACH customers like payroll processors and property management firms.
Through offering these full-service product lines, smaller banks across the country are noting increases in business consumers who switch from the big banks, who cannot provide the same level of customer service. The article discussed that even bigger banks are removing some of these electronic services from their product lines for the same reason that banks hesitate to add them in the first place – fraud and other security concerns, which open banks up for liability issues.
If your bank can manage its risk, then it can be hugely beneficial to add electronic banking services, especially ACH origination, to your product lines.
Five tips for a more successful ACH origination program:
- Know your customers
- Play by the rules
- Include your regulators
- Create a short business plan
- Join the ACH associations
Among these tips, the article discussed the importance of knowing your customers as being the best risk-management tool for determining whether to offer ACH origination to a business. Above-all, having a complete understanding of the client’s business, their financial situation, and their practices, can offer the most complete picture of the risk involved with approving them for ACH origination.
For details on these tips and more information on providing this value-added service, read the full article on Independent Banker.