April 21, 2011

As banks work to maintain profitable customers amid changing times, one of the primary incentives to offer remains a rewards program. To that end, Brookfield, Wis.-based Fiserv announced enhancements to its Relationship Rewards for its Premier core bank platform to allow banks and credit unions to tailor incentives in a way that could build customer loyalty despite the changing regulatory landscape.

The new version of Relationship Rewards for Premier lets financial institutions choose how to reward customers for profitable behavior, relationships and activities, such as multiple accounts, electronic statements, minimum balances or mobile banking.

Some of the nation's largest banks, such as Wells Fargo and Chase have already begun to sunset debit card reward programs in anticipation of lost revenue from the Durbin Amendment, part of the Dodd-Frank Wall Street Reform and Consumer Protection Act that will limit debit interchange fees. While that legislation is not thought to be an immediate threat to smaller and community banks, it could represent an opportunity if smaller institutions are able to incentivize their products, says George Noga, SVP and managing director of Fiserv's Revenue Enhancement Solutions.

"In many ways it is the most challenging of times for community banks, but it could be a big strategic opening for them," he says. "What they have to do is not lose site of what they're good at and what differentiates them from the larger banks, and that is customer service."

Winston-Salem, N.C.-based Southern Community Bank and Trust has exceeded its expectations using Fiserv's Relationship Rewards. The bank, which implemented the program in January 2008, now has more than 7,200 accounts. Of the customers enrolled in the program, Southern Community Bank and Trust's retention rate is 2.5 times higher than those enrolled in non-reward accounts.

"I would say it has been the most successful product launch in our bank's 15 year history," said Jeff McDowell, the bank's SVP and director of Retail Banking. "This approach has helped us bring in hundreds, if not thousands, of new relationships to our bank."

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