Bank of America announced a new rewards program Monday, its latest attempt to win more business from existing clients as lenders nationwide compete for the assets of affluent customers.
The Preferred Rewards program is part of CEO Brian Moynihan’s strategy to expand the bank’s relationship with its 8 million mass-affluent customers, defined as those with $50,000 to $250,00 in assets, which Bank of America refers to as its “preferred banking” clients.
The new rewards program is open to clients with an average of at least $20,000 in Bank of America checking, savings or investment accounts. It will replace an older rewards program, Platinum Privileges, which requires clients to meet a threshold of at least $50,000 in assets.
Preferred Rewards will apply to a variety of Bank of America products. Rewards include points or cash back on credit cards, interest rate discounts on home equity loans or lines of credit and credits on loans for home purchases or finances.
The Charlotte-based bank plans to roll out the program nationwide in phases, with a North Carolina launch around September.
The bank says the new program will reward clients for “everyday” banking activities.
“It’s rewarding (you) ... as you expand your relationship with us,” said Aron Levine, Bank of America’s head of preferred banking.
Greg McBride, chief financial analyst for Bankrate.com, said the new program comes at a time of intense competition among banks for mass-affluent households. It also comes at a time when big banks are challenged to grow revenues amid hurdles such as low interest rates and higher regulatory costs.
“Achieving growth in that type of environment is a lot easier if you’re able to retain existing customers and grow the relationship you have with them, rather than pinning all your hopes on bringing in new customers,” he said.
Moynihan, talking about the bank’s consumer banking segment at a December conference, described preferred banking customers as “our strongest growth opportunity.”
The bank wants to “deepen” its relationship with those customers, who generate more revenue for the bank as they buy more products, he said.
Bank of America’s new rewards program comes on top of other steps the bank has taken in recent years to serve mass-affluent clients. Since 2012, the bank has been adding specialists in its branches to steer those customers to mortgage, investing and other products and services.
There are 59 of the specialists in the Charlotte metro area.
Dean Athanasia, president of preferred and small-business banking for Bank of America, said the bank plans to grow to 2,500 specialists nationwide by the end of 2014, including more in the Charlotte area, he said.