Should Community Banks Offer Subscription Management Services?

These days, many of us suffer from “subscription overload” for everything from fitness programs to online news sites. According to pollster YouGov, six out of 10 consumers pay for at least one subscription they haven’t used in the past six months.

The average adult now spends around $270 per month on subscription services, or more than $3,200 a year. Worse yet, $600 of this is spent on unwanted or unused subscriptions that people don’t even remember subscribing to.

“Many people simply forget what they have signed up for,” says Mike Ogaard, chief operating officer for $550 million-asset Community Bank Mankato in Mankato, Minnesota. “They start out using a service, and as time goes by, they stop using it and don’t know how to cancel. Or they don’t take the time to review what they’re getting charged for.”

Community banks can ease subscription overload

This presents an opportunity for community banks to drive customer engagement and add value to relationships. Offering subscription management services can help customers track their subscriptions and align expenses with their budget. In fact, some observers believe that offering these services could become table stakes for banks within the next couple of years.

“I think it’s critical that community banks understand this is really an emerging issue for consumers when it comes to managing their money,” says Andrew Silsby, president and CEO of $1.8 billion-asset Kennebec Savings Bank in Augusta, Maine. “We can provide a real solution to a financial problem, which not only helps our customers but also deepens their relationship with the bank.”

Ogaard agrees. “Anytime you can help customers organize their finances and save money, it ties them closer to you,” he says. “The more account relationships and services customers use, the more likely they are to stay with your bank.”

Silsby believes the widespread use of debit and credit cards instead of cash is a big factor in subscription overload. “When there are so many transactions on a card each month, it can be easy to overlook relatively small amounts like $10 or $15 for subscriptions,” he says.

How subscription management services work

Subscription management solutions use algorithms to identify recurring charges on customers’ bank accounts or credit cards and then monitor payment deadlines and subscription renewal dates. In the process, they help consumers spot subscriptions they aren’t using or have forgotten about. 

A typical service displays a list of all subscriptions with company names and logos in one place, making them easy to spot. It shows the billing frequency (such as monthly or weekly) and customer’s average monthly and annual spending on each, along with subscription details like renewal dates. Some of the services also offer one-click cancellation of unwanted subscriptions.

“If you’ve ever tried to cancel a recurring subscription or payment, you know what a timesaver this feature is,” says Silsby. 

Kennebec Savings Bank currently offers a service that identifies subscriptions for customers, but it doesn’t yet offer the ability to cancel them. “This is where we eventually want to get with our solution,” says Silsby.

There appears to be a ready market for subscription management services. In a study conducted by Cicero Consulting, 37% of respondents said they would like to have this feature on their phone’s banking app. They especially value the convenience and time savings offered by services that flag unwanted subscriptions and make it easy to cancel them.

Subscription management services can work well together with budgeting apps. Whenever a subscription is cancelled, the savings can be automatically added to the customer’s monthly budget, which is adjusted accordingly. 

“The goal is for the service to be seamless for the customer and viewed as part of the bank’s overall service offering,” says Ogaard.

An array of perks for community banks

The main benefits of offering subscription management services for community banks come down to customer retention and increased revenue. 

“It helps create deeper relationships and boost customer loyalty,” says Silsby. “When community banks help customers identify and solve financial problems, customers are more likely to stay with the bank.”

“This is another way to build your customers’ confidence in the bank by showing that the bank has a sincere interest in helping them,” says Ogaard. “All financial institutions generally ‘sell’ the same products, so having a way to help customers on a daily basis locks them in with you. 

“Deposit dollars are not easily attracted, so being a resource for this service helps cement customer relationships,” he adds.

Offering subscription management may also present opportunities to cross-sell other bank products and services, thus boosting revenue. 

“Relationship banking is the key to success for most community banks,” says Silsby. “This is hard to do in a digital world, but offering subscription management services is one way to accomplish it.”

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