In trying to boost participation in its debit rewards program and attract customers for its other products, Regions Financial Corp. took an approach that could help it cushion the potential loss of card revenue from new regulations.

Overhauling its program, the Birmingham, Ala., parent of Regions Bank has made it possible for customers to earn more points by using more of its products and to spend those points on other banking services.

"We had relatively low participation and engagement rates in those loyalty programs," said Tom Brooks, the head of Regions' cards and payments division. "With our focus on trying to deepen the relationship we have with our customers overall, we first went and talked to our customers. Through surveys and in interviews … what rang true, very consistently, was [that] customers really wanted to be appreciated and thanked for the depth and breadth of their relationship with their financial institution."

Some larger banking companies, including Citigroup Inc. and JPMorgan Chase & Co., offer perks such as more points and better rates on nonchecking products for using multiple products. But analysts say the scope of the Regions Relationship Rewards program goes beyond what they have seen most banks try. And the ability to pay for services such as a stop-payment orders, check printing and loan originations is rare in practice.

"Though it's not radical in terms of thinking, I don't know why everyone isn't doing that," Bart Narter, the senior vice president of Celent's banking research team, said in reference to using points to pay for banking services.

Customers who use services such as online bill-pay and online banking and maintain minimum combined balances in their checking, savings or money market accounts can earn monthly bonus points. They also can redeem the points for safety deposit box rentals, wire transfers, overdraft fees, as well as standard gift card and merchandise selections.

Regions actually started considering ways to change its debit rewards programs two years ago, before debit interchange fees entered the political spotlight. Serendipitously, it is now ready to deal with the new debit interchange rules and credit card regulations that threaten the card business' profitability.

"Especially now that there's more regulation associated with rates and fees, looking at a single product is probably not the most valuable approach," said Beth Robertson, the director of payments research at Javelin Strategy and Research in Pleasanton, Calif. "There's a larger picture available for each relationship, and looking at that can be helpful in balancing out whether the revenues and costs associated with various accounts are making sense for the institution as a whole."

But whether Regions' overall strategy will work is questionable, according to Bill McCracken, the chief executive of Synergistics Research Corp., a payments consulting firm in Atlanta.

Combining multiple products under one rewards program is a smart move, he said, but he was skeptical that customers would see much value in using their points for other bank products and services.

"I like the Relationship Rewards," McCracken said. "If they can justify it from a dollars-and-cents standpoint, it's a great program." But "people aren't going to beat their door down to buy other financial services products."

His company's research shows that consumers prefer cash back over rewards that include banking services or discounts on other financial services, such as a reduction in mortgage interest rates.

Though the Regions program has been in place only about two months, Brooks said, the bank has seen evidence that the strategy is not only helping in terms of higher participation but also in attracting customers for other products.

"The early results are quite strong," Brooks said, "and probably the most telling result out of the gates is the participation rate." He declined to disclose participation figures.

The core of Regions Relationship Rewards is the customer's checking account.

Consumer checking account users earn one point for every $4 spent using signature-based, Regions Visa CheckCards. Business checking account users earn one point for every $2 of signature purchases. Regions' high-net-worth clients, who have a private banking checking account, earn one point for every $1 of signature purchases.

Private banking and consumer checking account customers can earn monthly bonus points based on the combined average monthly balances with other eligible accounts, including savings and money market accounts. The use of online banking and monthly online bill-pay services also qualifies.

The more services customers use and the higher their combined account balance, the larger their monthly bonuses are.

For example, a customer with a combined balance of $500 to $10,000 who uses three to four eligible products and services earns 100 bonus points a month. A customer with a combined balance of $10,001 to $50,000 who uses one to two eligible products earns 300 bonus points.

To expand redemption options for participants, Regions added the ability to pay banking charges with their points. Current options include 750 points for a $5 monthly account fee rebate, 3,000 points for a $20 wire transfer fee, 4,000 points for a $25 check printing fee and 5,000 points for a $35 overdraft fee.

Regions included those options based on feedback showing customers wanted more than just "gift cards or airline tickets," Brooks said. "We took a look at the types of fee-based products or services that are most commonly used by our customer."

Javelin's Robertson said the actual value of Regions' point system "doesn't look as strong as some rewards programs" but that the ability to get more points by using more products is relatively unique.

"I think it's unusual for the card business to view itself within the overall [banking] relationship," she said, adding that the silo'ed structure of most banks' product lines makes it hard to create an effective relationship-based program.

Celent's Narter noted that Citi has been one of the most prominent banks letting customers earn points from more than just their debit or credit card purchases.

JPMorgan Chase also offers capabilities similar to Regions'. For example, it offers a Chase Freedom credit card that earns checking customers 10% extra points on every dollar spent and 10 bonus points per purchase in addition to the standard one point they earn for each dollar spent.

"Really, the greatest challenge is the internal politics of the banks and how the P&Ls are drawn," Narter said. Regions would not say how it is funding the program but said it worked with representatives of multiple business lines in devising it.

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