Spokane Journal of Business

Cash-for-account offers increase

Competition for deposits drives incentives

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-—Linn Parish
Brian Read, executive vice president of Umpqua Bank, says banks are working harder to get deposits, but Umpqua doesn’t plan to offer cash incentives currently.

Some large banks that operate in the Inland Northwest are offering cash incentives to new customers who open checking accounts, start savings accounts, or sign up for direct deposit on existing accounts.

Industry executives say competition for more deposits is driving the new offers. 

“Competition is tough and tight, and you’re probably seeing more of that than you did five years ago,” says Brian Read, a Spokane-based executive vice president with Portland-based Umpqua Bank.

The offers typically involve amounts ranging from $50 to $250 and require a customer to use a direct-deposit feature, through which money—a paycheck, for example—automatically is deposited into a new account on a regular schedule.

Bankers here say community banks likely will roll out their own incentives, though not all are planning to do so. 

Meantime, those who have incentive programs in place now say they’re having the desired effect. 

“The early feedback is yes, we’re seeing more clients come into our centers,” says Gerrod Parchmon, a Seattle-based senior vice president with Bank of America.

Parchmon says that Bank of America, which operates 12 branches in the Spokane-Coeur d’Alene area, launched an offer in June through which customers who set up and use direct deposit receive $100. That offer is scheduled to extend through the end of this year. 

JPMorgan Chase Bank, which has 14 branches in the Spokane-Coeur d’Alene area, has an incentive through which a customer can secure up to $250. In one, a new customer can receive $100 for opening a new checking account and setting up direct deposit. In another, a new customer can earn a $150 bonus for opening a savings account, depositing at least $10,000, and keeping that balance in the account for at least 90 days. 

At U.S. Bank, new customers who open a certain combination of checking and savings accounts can receive up to $100. They would receive $50 after saving $500 within 12 months, then they can receive up to $50 in cash-back offers on certain purchases. 

Linda Elkin, U.S. Bank’s Spokane-based regional president for Eastern Washington, says she doesn’t have data on how many customers are signing up for new accounts because of the cash incentives. However, she says client surveys in recent months have shown an improved experience with the bank. 

“Is there a correlation between the scores going up and the incentives we’re offering in the branch?” Elkin says. “I think there is.”

Chad Burchard, vice president and chief banking officer at Spokane-based Inland Northwest Bank, says the bank is discussing checking-and-savings account promotions. He says INB likely will begin marketing some of its accounts that offer higher interest rates. 

“We’re not giving anybody cash to come to bank with us, but we are paying higher interest to attract deposits,” Burchard says. 

He says it’s difficult for community banks to compete with national banks for deposits by appealing to a broad audience, and a bank like INB, which has 16 branches in Eastern Washington and North Idaho, focuses on building relationships with customers and within the community to attract more business. 

Another challenge, Burchard says, is that more customers are using online banking services, and with that, transactions are declining at the branch level. 

Consequently, he says, “It’s harder to get them to switch. It takes something large.”

Umpqua’s Read says that bank currently doesn’t plan to offer incentives for new checking and savings accounts. 

“It’s not a strategy we’re looking at,” Read says. “We try to differentiate through relationship and touch and knowledge. We sell on value and our community-based banking approach.”

Umpqua, which acquired Spokane-based Sterling Bank in 2014, has 12 branches in the Spokane-Coeur d’Alene area.

While Umpqua isn’t planning any cash incentives, Read stresses the importance of checking and savings accounts to the bank. He points out that such accounts are more valuable in a low-interest rate environment, because profit margins are tighter. 

“It’s the lowest-cost deposits that exist,” Read says. “CDs (certificates of deposits) have an interest expense, but checking is zero to low, low interest. The more of those relationships you have, it makes your margins better.”

New checking and savings accounts bolster deposits, but bankers say another benefit is that they can lead to the sale of more products. 

Elkin says, “Fundamentally, the checking account is a gateway to a relationship. From there, there’s the possibility of wanting to buy a car or finance a home. Or to have short-term savings. It all starts with a checking account.”

Bank of America’s Parchmon says it’s about trying to find ways to deepen a relationship with a customer. 

“If that client mentions buying a home, as an example, what we do is spend time helping them build a pathway to get there,” he says. “We want to make sure they’re able to bank better.”

Linn  Parish
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Editor Linn Parish has worked for newspapers and magazines since 1996, with the bulk of that time being at the Journal. A Montana boy who has called Spokane home for some time now, Linn likes Northwest trails, Deep South foods, and lead changes in the ninth inning.

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