Workplace Banking: A Multiplier for New-Account Sales

Bankers are continually seeking venues to bolster new-account growth.  And in those efforts, a simple truth of mathematics always holds: more is greater than less. If we can amass accounts 10 at a time, that’s better than one at a time. So where can bankers find opportunities to accrue accounts in multiples, instead of each account individually, one at a time?

One option lies in workplace banking, where a bank creates an offering tailored to the employees of a specific company. The premise involves developing a favorably priced offering that a participating company can position as an employee benefit; and for which the company in exchange grants the bank some level of access to its employee base.

A workplace-banking program is most beneficial when it coordinates the consumer and business sides of the institution (i.e., where the consumer offering complements a commercial depository and/or lending relationship). In that environment, the commercial relationships provide a channel for ongoing dialog with company executives, where bankers can reinforce the benefit of the workplace-banking program and address any issues arising in implementation.

The employee-facing component of the workplace-banking program can include a discounted bundle of services, anchored by a checking account, but also allowing a discount on mortgage-origination fees or a rate premium on CDs (for example). By collaborating with the employer, the financial institution can gain the ability to promote the offering in new-employee orientation packages, or via hosting financial education sessions at the worksite: for example, discussing retirement planning and IRA options, or how to buy your first home. The discounts available to the company’s employees forgo some level of revenue on a per-account basis, but the institution can offset that via the greater volumes ‒ again, by amassing accounts in multiples versus one at a time.

Any workplace-based checking relationship should mandate direct deposit, which saves the employer money (whether they process their own payroll or outsource) and time, if they process their payroll internally. The simplicity of direct deposit also reinforces a mutually beneficial relationship between the institution, the company and the employee. Further, if the workplace-linked checking account receives the employee’s paycheck, then that account will presumably serve as the consumer’s primary checking product; and thus more likely to see heightened debit card activity, which then augments fee revenue.

For larger employers (1,000+ workers), some banks will place ATMs at the worksite (e.g., hospital, large manufacturing plant) to provide an added convenience. Workers who use the institution can then enjoy fee-free access to cash, while others incur surcharges, giving incentive to migrate to the employee-banking option.

One other way to bolster acceptance of a consumer-side offering is to reinforce the institution’s brand on the business side by providing the business’ credit card (if the firm is such that employees travel routinely and a significant number have a corporate credit card). By establishing that card relationship on the business side, the institution creates a continual reminder to the employee of the value it offers. Every time the employee purchases office supplies or takes a client to lunch, they see how their employer trusts the institution as its primary banking provider.

Credit unions have for years employed workplace banking programs via the Select Employment Group provisions of their charters. But as more credit unions have migrated to community charters, that activity has waned. On the bank side of the industry, some institutions have adopted workplace-banking programs, but the incidence remains sporadic. In both sub-sectors, the impetus for workplace-banking programs has usually arisen from the consumer side, where a branch manager or a dedicated group-banking officer calls upon prospective employer-providers. However, that model neglects the greatest inroad an institution may hold with a company: their commercial lending and/or depository relationships.

Accordingly, to implement a widescale workplace-banking program, institutions must provide training to business bankers and commercial relationship managers, and create accompanying product collateral. In that manner, the workplace-banking offering joins other ancillary services (such as remote capture and positive pay) as one more offering to tout when presenting the benefits of a holistic relationship with the bank. And if the company perceives the workplace-banking offering as a valuable part of its banking relationship, it will support those key cross-promotions in employee welcome kits, periodic email reminders and educational sessions ‒ fostering the goal of creating that efficient channel where the institution can add multiple relationships from a single sales effort.