Of the 23 entries we received in our “win a free registration at Bank Innovation 2012” contest, the winner is Mike Curtis, president of Curtis Consulting LLC, for his “earnings credit” idea.

Before we get into Mike’s idea, let me first thank everyone who submitted entries. 

Additionally, just a word about how we chose the winner. We were looking for an idea that: a) could be implemented; b) was “holistic,” meaning that it had finite parameters; and c) had the potential either for great revenue and/or to substantially change the way banking is done.

Mike’s entry meets each of those criteria. Here is his formal entry:

Develop true, explicit “relationship banking” by bringing the concept of compensating balances and account analysis to the consumer market. This would clarify the value proposition offered by the relationship between bank and customer in terms of interest rates, services and fees. 

Provide a simple on-line view of balance history and “earnings credit” that the consumer can use to offset fee-based services. This could be extended to provide additional “earnings credits” for those using only direct channels versus staffed channels to transact business. It could also provide a “bank” of credits replenished when consumers expand their share-of-wallet with the bank by purchasing additional products.

In the end, this approach can provide the right incentives to align consumer behavior with bank profitability in terms of channel usage and cross sales.

What Mike is proposing, in our understanding, could markedly change the way banking functions, or rather the way consumers bank. Today, consumers generally use their banks with just one consideration in mind: the goal at hand. In other words, the consumer goes to an ATM because he wants to go to an ATM, not for any other reason. But Mike is suggesting that banks could more substantially incentivize consumers to use various banking services that are more profitable to the bank. And, most importantly, he is saying that this should all be done in a transparent, open manner.

Granted, some banks have “rewards” programs today. Citibank, for example, offers its Thank You points program, but there is no link between value to the bank and the incentives consumers receive – or at least that link is not at all clear to the consumer. The consumer has no idea whether he gets more points if he opts to communicate with the bank via email vs. via branch teller. 

Other banks will incent their customers to opt for paperless account statements, and that is sort of what Mike is proposing. But Mike’s proposal goes well beyond paperless statements to pervade the entire bank-consumer relationship. We see his suggestion as plausible, executable, and meaningful. 

There were other strong ideas, too. The following entries receive Honorable Mention, which entitles them to a discounted registration:

• Tyler Williams for his pre-order service;
• George Colwell for his mortgage game idea; and 
• Cassie Fulton for her fully integrated payment receipt idea.

The truth is we are impressed and inspired by the ideas. We plan to present them at Bank Innovation 2012, as well as use them as jumping off points for our Ideastorm brainstorming session.

Thank you to all the participants. We look forward to continuing the dialogue at Bank Innovation 2012 next month.