French retail bank LCL, a subsidiary of Crédit Agricole, has rolled out an innovative ‘build it yourself’ retail banking product that is being marketed as a way for consumers to save money. Rodrigo Amaral spoke to Sébastien Mahieux, head of client marketing at LCL.
French bank Le Crédit Lyonnais, referred to as LCL, has launched a service that allows its clients to have control over the products and services they use and pay for. The goal is to challenge the practice of packaging products as well as to meet the new aspirations of better informed retail banking clients.
The service, called ‘LCL à la Carte’, is being positioned as a way for the bank’s customers to save money by only selecting and paying for products that they actually need. It has been launched at the same time that new consumer laws have implemented higher transparency requirements regarding banking fees.“The idea behind LCL à la Carte is that the client will not pay for things he does not need,” Sébastien Mahieux, the head of client marketing at LCL, told RBI. “On the other hand, he or she will be able to take advantage of cumulative discounts. Global fees will, therefore, be more to clients’ advantage than those of packages offered by other banks.”
LCL says that savings achieved by the à la carte service can reach as much as 20 percent of the combined cost of the products purchased by the client. A further 10 percent discount off total fees charged to the client at the end of one year is also promised.
In the case of account holders who are younger than 30, discounts can amount to up to 37 percent of total fees as LCL à la Carte can be combined with other promotions aimed at attracting young customers.
Clients can choose the products they want either online or with the help of an adviser in an LCL branch. There is an online calculator for customers to work out how much they can save with each combination of products. The variables include:
• Means of payment (debit cards, chequebooks and others);
• Internet banking;
• Banking by SMS;
• Online or print statements;
• Saving accounts (Livret A, sustainable accounts and others);
• Short term loans; and
• Insurance (payment protection, overdraft protection, life insurance).
The only mandatory product for account holders is a debit card, according to Mahieux. From that basis, clients can build up their own packages of products of services.
“We believe clients will chose an average of four payable products,” he said. “The most popular will certainly be the debit card, payment protection insurance, the online brokerage and a free savings account.”
Cost estimates based on the four products mentioned by Mahieux, if purchased by a single, over-30 account holder who is not a student, would cost €5.69 ($7.31) in monthly fees, including a 10 percent discount that applies when two payable products are chosen in addition to the debit card. Services like a daily statement sent by SMS cost €4.50 a month, and chequebooks are a further €3.50. Premium products like a Visa Premier card can add €10.50 a month to the fees charged to the client.
The online simulator offers explanations when required, and the help of an adviser can be requested online if necessary. Some of the products, when presented to the user, are accompanied by videos where LCL staff members explain their advantages. Pop-up pages also aim to explain why products like payment protection and online money transfers could prove to be good choices.
LCL claims that the new service reflects changes that have already begun to take place in the retail banking market in France.
“The demands of French clients have evolved,” Mahieux said. “LCL à la Carte is a better match to what clients expect today: autonomy, the ability to compare products, transparency and not to pay for things they don’t use.”
The point that French clients do not always benefit from packages of products and services offered by their banks has been broadly vindicated by a survey made by CLCV, the French consumer association. The researchers concluded that, in most French banks, clients pay more for packages than they would do if they could pay only for those products they actually use.
Worse for poorer clients
According to the survey, the situation is particularly unfair for poorer clients: they pay on average €111.62 a year in account fees when they have to go with set packages. If they could pay for only the things they use, the cost would be €73.14. In some banks, the difference reached more than 120 percent, according to CLCV.
More sophisticated account holders, who tend to make use of a higher number of banking services, also often fare badly when they cannot pick and chose banking services. CLCV examined the banking habits of wealthier banking segments and concluded that at half of the banks analysed these customers would pay more for ‘off the shelf’ packaged services than if they could select products individually.
New consumer legislation in France, however, could help bank customers to become better informed and help them put pressure on banks to have more say over what they pay for banking services, according to the head of CLCV, Reine-Claude Mader Saussaye.
Since January, French banks have been obliged by law to provide annual statements of fees charged to their clients. Mader said she welcomed the new legislation as a major development that will finally allow clients to properly compare their bank with the competition.