COCC and Strunk Offer Breakthrough Checking Product

AVON, Conn., July 19, 2007 – COCC, the region’s leading provider of next generation technology services for financial institutions, and Strunk and Associates today announced the general availability of Reward Checking -- a breakthrough checking product that is proven to attract and increase deposits as well as improve customer retention. The new Reward Checking product increases an institution’s market share through marketing incentives that reward consumer use of lower cost e-Banking channels.

“COCC is focused on helping its clients grow efficiently and effectively in today’s tight markets,” said Wendy DeMore, COCC’s First Vice President – Product Management. “Reward Checking is tailor made to attract new money and to increase customer retention. The product also increases consumer use of least cost service channels that generate improved profit for financial institutions. Customer behaviors that make use of lower cost, technology-based banking channels are rewarded with above market interest rates on their Reward Checking account -- making it a win for customers and financial institutions alike.”

Community banks and credit unions have been promoting free checking programs for years, reasoning that fee income would more than compensate for the costs associated with bounced checks and low balances. However, with the advent of lower cost e-Banking services such as direct deposit, e-statements, and POS transactions, as well as income generating venues like debit cards, financial institutions have the opportunity to reward customers for exhibiting cost-effective, income-producing behaviors.

“We encourage the financial institution to offer an interest rate on Reward Checking accounts as much as 25 basis points above the best CD on the market,” said Mike Potter, Senior Vice President at Strunk and Associates. “Customers get a free checking account with no minimum balance and no foreign ATM fees. The financial institution simply establishes prerequisites that the customer perform a minimum number of POS transactions, substitute e-Statements for paper, and pay bills online. Those are money-making business channels for today’s financial institution.”

Results to date support Potter’s view of deposit growth and cost savings through e-Banking adoption. Use of direct deposit, debit cards and online banking tripled among Reward Checking customers over their free checking counterparts. Average balances increased nearly tenfold as did the spread earned on those deposits. Combining the cost savings and earnings, Reward Checking customers generated an average of three times the average net revenue of free checking customers.

John Heaps, President and CEO of Florence Savings Bank in Florence, Mass. which was an early participant in the Reward Checking program with COCC, said, “Reward Checking is a phenomenal home run for us. We are attracting two separate markets – people enticed by high interest rates and those who seek free ATM usage. The 6.01% offer gets their attention, but it’s not what drives them.”

Gwenn Bézard, Research Director at Boston’s Aite Group, agrees, adding that financial institutions can't build successful deposit relationships simply by ‘buying’ customers. “Most financial institutions are spinning their wheels, caught in a vicious circle of overpaying for highly volatile new deposit relationships to recover mismanaged deposit relationships. By better managing deposit pricing, they can significantly improve deposit retention and organic growth performance.”

The Reward Checking product is all about relationship management, regularly evaluating hundreds of data points for each customer in the program. Mike Potter says the program is entirely data-driven and closely monitored. “We rely extensively on the information COCC collects on its advanced core processing system,” said Potter.

“Every customer receives a monthly report as well,” Potter added. “One in four customers won’t perform enough of the right behaviors to qualify for the high rate in any given month. We tell them in the monthly email – you earned your reward or you didn’t, and here’s why.”

Hearing about reward checking for the first time, a number of financial institutions worry about cannibalization of existing products, cost of funds, and ATM refunds. “All of those concerns are addressed and satisfied by the Reward Checking product,” said COCC’s DeMore. “And the numbers bear up in actual experience.”

“The average banking customer is now 35 years old, Internet-connected, and more likely to select their bank online than by walking through their neighborhood,” said DeMore. “This product addresses those customers and more, converting them from occasional, “shop the special” consumers to long term, profitable customers. Reward Checking is the next big thing in banking. COCC is pleased and proud to offer this next generation solution.”