This is the question that drove Deluxe to create SwitchAgent, an online service that helps customers switch between banks, and for banks to use to enroll new customers.
A major obstacle to switching accounts is the bill pay service. It’s tedious to re-enter every vendor you’re paying online, which is why bill pay switching is a key feature of SwitchAgent’s service.
So how does SwitchAgent, which was unveiled at last week’s Finovate Fall, work? First, you select the bank to which you would like to switch and set up an empty account. You’re given a tracking number. When you go online to your new bank’s site, you’ll enter the SwitchAgent environment and:
- Enter your tracking number
- Select your old bank
- Enter login information to your old bank account
- Click transfer
Sounds simple. But what’s in it for banks? Deluxe’s research shows that 25% to 35% of new accounts go dormant within the first three months. A key part of retention is providing a solid bill pay service. SwitchAgent says it does the following four things for banks:
- Decreases inactive accounts
- Increases anchoring
- Increases product use
- Decreases closed accounts
The service cost customers nothing, although there may be fees associated with closing accounts levied by particular banks. Deluxe wouldn’t comment on what banks paid to make the service available to its prospective customers beyond saying that a fee structure had been established.
Bank Innovation spoke to Robert Rubin, a banking strategist at Novarica who launched a product called Bankswitcher in 2005 about Deluxe’s foray into Bankswitcher’s old turf. Bankswitcher failed, Rubin said, because it was difficult for his small startup to muster the resources to forge strong relationships with banks. Deluxe certainly has that covered. Rubin later launched FindABetterBank, which is a self-serve product involving the use of a PDF Switch Kit. FindABetterBank remains available to consumers.
Rubin foresees success for SwitchAgent, but identifies two challenges going forward.
The first is that bill-pay services such as CheckFree (owned by Fiserv) are also stakeholders in the switching process, and they have ways of making difficult the “scrape-and-paint” process of pulling payee data from one bank and re-posting it to another. Specifically, certain fields essential to setting up payee profiles, such as the phone number, are hidden from the scraping process and, therefore, are not “painted” to the new site.
Another challenge is that banks, particularly smaller banks, already have more pressing needs than paying for a switching service. Those needs include growing revenue in a low-interest environment, regulatory compliance, and developing mobile apps. In the current environment, SwitchAgent could be a tough sell, Rubin says.
The idea behind SwitchAgent is inspiring, and the demo at Finovate turned some heads. Bank Innovation highlighted SwitchAgent as one of the standouts of the show and we look forward to seeing SwitchAgent help customers land at the bank that suits them best.