The Prague Post Online: Business: GE launches single-fee banking promotion

http://www.aaaradiotaxi.cz/index.php?xSET=lang&xLANG=2

August 28th, 2008

Endowment Fund Business Listings ONLINE Reservations Classifieds Subscriptions

Prague Art & Antiques Prague Art Prague Antiques

GE launches single-fee banking promotion

With service, company actively courts its competitors' customers

By František Bouc
Staff Writer, The Prague Post
February 7th, 2007 issue

Turning the banking sector’s weakness into a business opportunity has become the central marketing strategy in GE Money Bank’s effort to seize new customers.

For more than a year, Czech retail banks have faced sharp criticism from regulatory bodies and various consumer-defense organizations for having a nontransparent system of high fees. Financial institutions tried to fight off the attacks and to substantiate their claims to the contrary.

Not any more.

While most gradually reduced some of their charges, GE Money Bank introduced a new campaign Feb. 1 that uses fees as the principal marketing tool for winning new customers.

GE Money Bank launched new accounts that will be hit with only one aggregate fee, regardless of the volume of transactions. Also, it offered to sort out all paperwork for potential customers related to their possible transfer from competing banks.

“We aspire to set a new trend of more transparent banking fees,” company spokeswoman Eva Chaloupková said. “This should make our bank even more customer-friendly and attractive.”

The bank launched its new campaign just one day after the European Commission criticized artificially high fees across Europe.

Chaloupková admitted that the EC’s most recent attack on fees helped put the campaign into the spotlight.

“The timing of our campaign was not intentional, but it is obvious that the EC’s emphasis on bank fees helped further stress the importance of the issue and the need to deal with it,“ Chaloupková said.

One-upmanship
Representatives of competing banks said that GE Money Bank’s initiative was not unprecedented.

“Citibank already offers most of its services free of charges when a customers’ account balance is more than 100,000 Kč [$4,600],” Citibank communication officer Markéta Dvořáčková said.

Similarly, HVB Bank spokeswoman Petra Kopecká said HVB creates packages in which some services are free of charge.

Česká spořitelna’s Klára Gajdůšková did not hesitate to call the most recent GE Money Bank campaign a marketing trick.

“When we put together the services that GE Money Bank began offering at a flat charge of 119 Kč per month, we realized that the same package would cost only 69 Kč in our bank,” Gajdůšková said. She said the campaign is actually an effort to attract attention by bringing the controversial issue into the spotlight.

“There is tough competition on the market, and banks must come up with innovations on a regular basis,” she said.

Not long ago, GE Money Bank attempted to target competitors’ customers by offering to syndicate all loans that individual customers have through various institutions into just one maintained by GE.

In more aggressive marketing, Poštovní spořitelna attacked Česká spořitelna in November through a guerilla campaign in which it pointed out the allegedly better accessibility of Poštovní spořitelna outlets in smaller towns.

Otakar Schlossberger — the Czech Republic’s financial arbiter, who advocates on behalf of bank customers — said the high level of competition is positive for customers.

“Today, the statement that some bank is ripping off customers through charging high bank fees is hard to substantiate,” Schlossberger said. “There are 32 competing banks on the market here, and Czechs can also open accounts elsewhere within the EU.”

He anticipated that the GE Money Bank campaign would not bring about any major exodus of clients from other financial institutions.

“Czechs are not very flexible when it comes to switching banks,” Schlossberger said.

He said less-informed and older customers tend to be most price-sensitive.

“Most bank customers tend to prefer the quality and wide portfolio of services to merely low fees,” Schlossberger said.

František Bouc can be reached at fbouc@praguepost.com

Be the first to add a comment!

Most e-mailed articles
NATO looks east Czechs refute U.S. tourism report Taking sides

Related articles
VZP to slash 800 doctor contracts Still playing the body electric Movers and Shakers Electric slide Biz Events

Most visited in Business Listings

The Prague Post Online contains a selection of articles that have been printed in
The Prague Post, a weekly newspaper published in the Czech Republic.
To subscribe to the print paper, click here.
Unauthorized reproduction is strictly prohibited.