Like many other banks around the country in 1973, the management of the Valley National Bank of Arizona was looking for a unique and effective way to get into the electronic funds transfer (EFT) game. Eight years and over half a million cards later, the Bank's executives believe they succeeded with the Valley National Banking card.
In a team marketing effort with their advertising agency and the Polaroid Corporation, Valley National Bank orchestrated a successful campaign to conceive the right new product at the right time and get it accepted into the bank's marketplace.
As a result, the bank has issued over 500,000 cards, says Gilbert F. Bradley, board chairman, "and we've found a continually growing acceptance of its usage by our customers."
Prior to the introduction of the bank's debit card in November 1975, a task force was formed to investigate, recommend, and develop the bank's entry into the EFT era.
"Although we had about 400,000 personal and business checking accounts at the time," says bank spokesman Warren Goodrich, "we had been experiencing a market share decline in demand deposits. We wanted to reverse that trend in preparation for the full force of electronic banking."
Additionally, the task force set objectives to provide the best quality checking account for their customers in Arizona, increase market share, and improve the value of checking accounts to permit higher returns to the bank through increased fee income.
After setting specific goals for EFT entry, the bank's marketing research department conducted extensive research which included surveys of customers, merchants, and bank employees around the state.
"People kept telling us they wanted foolproof identification for check cashing," says Jane Fowles, the bank's EFT product manager. "Merchants and customers both felt that way."
Thus, the card the bank came up with includes more than just a postage stamp photo and magnetic strip to give customers access to automatic teller machines. The entire front of the card is a photograph of the customer.
The card is also a check guarantee card that gives customers the ability to cash checks up to $250 in bank branches, $100 at a participating merchants, and
Customers must apply for the service since the bank guarantees their checks whether or not they have funds in their accounts. Merchants must apply as well, but there isn't a charge to either customer or merchant.
The idea of a full-card photo "sounded great," recalls Mr. Goodrich, "but no one had done that before.
"Polaroid had approached us a few years before to put a photo ID on the back of our Master Charge cards," he says. "But we wanted a really unique service in the Valley National Banking Card, not just a mug shot. It had to be a warm, personal photo unlike any our customers had ever seen before."
Polaroid developed a process which produced a large customer photo with only a one-eighth-inch border.
"In the past," says Steve Logsdon, group marketing manager at Polaroid headquarters in Cambridge, Mass., "we'd always put the picture and the magnetic strip on the same side of a card because there was usually a design you couldn't fool with on one side. We devised a process through our ID-3 System to give a full portrait identification card and then developed a way to put it on the plastic for Valley Bank."
Mr. Logsdon says Polaroid has been able to use a variation of that card format in sales to other banks, educational institutions, and industrial accounts all over the country.
Initially at the same time of the card's introduction, Polaroid supplied the bank with 160 Polaroid ID-3 cameras to accommodate customer picture taking and processing in many of the bank's offices around Arizona. A special photo booth was designed with a silk screen art background for each office to soften the Photo ID effect.
Now the bank has 200 offices equipped with the cameras and booths.
When all the kinks were finally worked out of the finished product, Valley National Bank positioned the card in its marketplace as the "ultimate check guarantee card because it is you." A month before the card hit the streets, massive advertising and employee training took place.
Advance publicity and a six-week saturation ad campaign introduced the Valley National Banking Card in the fall of 1975.
Twelve thousand merchants in Arizona immediately signed up for the service, and six weeks later the bank was doing promotions around their 100,000th cardholder. Peak demand early in the program resulted in 5,000 photographs per day arriving at the bank's central production facility.
Valley National's share of check authorization market rose from 40.3 percent in November of 1975 to 42.9 percent by the end of the next year. The bank captured more than 57 percent of the growth in checking account dollars during the same period. By January of this year, over 65 percent of the bank's half-million checking account customers had the card.
The customers' cards give them access to 60 VNB automatic teller machines all over the state. (Valley Bank's machine at the University of Arizona in Tucson has one of the highest usages in the country, averaging one transaction every two minutes, 24 hours a day.)
"You never know when an idea is going to be good or not," says Dr. Lonnie Ostrom, professor of marketing at Arizona State University. "The key . . . is it going to be perceived as good by those who use the product and will they continue to use it? The repeat usage is what makes a product successful."
"What Valley National Bank did was a multifacet type of market research," he continues, "to test the perceived effectiveness of the service. That built enthusiasm throughout the organization and helped carry the service to success. The bank did everything right by taking the time and effort to take the card through the new service "development process," concludes Dr. Ostrom.
One of the services initially introduced with the card was a substitute check feature, like the old counter check concept. The bank wanted customers to get used to paperless transactions with their checking accounts. Ms. Fowles says its use has grown steadily, but more slowly than the check guarantee feature.
"Today the bank has over 20,000 Arizona merchants who use the Valley National Banking Card as a guarantee," comments Ms. Fowles. "We've been able to establish a strong merchant base through the contractual agreement between the bank and the merchant. This is a real necessity for future EFT usuage, particularly when we get into point-of-sales terminals in the futu re."