Imitating Amazon for Fee Income

By Dave Crook

We all know subscription-based companies like Amazon, Netflix and Dollar Shave Club have seen monumental success, but what happens when a bank attempts to follow this type of business model? Heritage Bank, based in Olympia, Wash., has listened to its customers’ call for this type of value, and in return has lifted its service charge income by 28 percent.

“The consumers are driving the change,” said Cindy Huntley, executive vice president, director of retail banking at Heritage Bank. “They have certain expectations from any service provider and expect their bank to deliver the same type of value.”

In late 2016, Huntley and her team set out to reinvent their checking account lineup to be more relevant and provide better value for their customers, and following the model of a subscription service, deliver a packaged product to their customer base.

“We did a lot of research on what the consumer was looking for and what was driving their decision,” said Huntley. “We found that if people are willing to pay for Netflix, Amazon, Sam’s Club, Hulu, the list goes on and on, then they’re certainly willing to pay for value in their bank accounts.”

A Fee-Based Value Account Beats Free
A recent study from Cornerstone Advisors reveals consumers’ interest in an Amazon Prime-type of checking account. Nearly half of 30-something millennials said they would pay $5-10 a month for an Amazon checking account including cell phone protection, ID theft protection, roadside assistance, travel insurance and product discounts. When asked about a free checking account from Amazon without bundled services, interest was lower among all age groups (millennials, Gen Xers and boomers).

According to the research, almost 60 percent of people would at least consider switching accounts if their primary financial institution offered this same type of checking account. Plus, more people in fee-based accounts are referring their bank or credit union than those in free accounts.

Seventy-three percent of 30-somethings say they would definitely switch or would consider switching accounts if a financial institution offered a checking account with those valuable services. Sixty-four percent of 20-somethings said the same.

Heritage Bank’s Response
For Heritage Bank, this research backs up its decision to partner with StrategyCorps to streamline its checking accounts and offer value-added benefits, including local and online discounts, cell phone protection, roadside assistance and identity theft aid.

“These are all relevant and valuable services that people purchase outside of the bank today,” said Huntley. “We felt that if we could offer this as part of their checking account, for much less than they’re paying now, that would be a really great thing to do.”

The bank had 17 different checking accounts as a result of mergers and acquisitions over the last five years, and free checking was their most highlighted account.

“We didn’t have a lot of opportunity to earn monthly service charge income on our checking accounts,” said Huntley. “Most of what we offered was free in hopes to stay competitive, but actually we were just like everyone else offering free checking.”

The bank migrated customers into three accounts: Summit Checking, including benefits and interest, Ascent Checking with benefits, and Base Checking.

“Of course we had some concern over people not responding to the change, but overall customers were thrilled with the benefits,” said Teresa Dean, senior vice president, retail sales manager.

The bank retained 77 percent of customers and 93 percent of balances.

“It hurts to see any customers leave, but we understand that some people don’t want to deal with any sort of change,” said Dean. “Our average balance is higher per household, and at 28 percent we’ve also seen a nice increase in fee income.”

Heritage Bank’s journey, plus the research that shows how customers’ buying preferences are changing, can influence more financial institutions to evolve their selling strategies and inspire banks to provide better value to customers.

“It’s really a win-win,” said Huntley. “It’s the opportunity for the bank to earn fee income, and it’s an opportunity for the consumers to have a really valuable, all-in-one account relationship with your bank.”


Dave Crook is the managing partner at StrategyCorps, a Nashville-based company that works with financial institutions nationwide to deliver mobile and online consumer checking solutions that enhance customer engagement and increase fee income. For more information, visit

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