And all the ashes turned to stars
There are plenty of examples of companies doing a great job innovating in their business models – changing what we call the “unit of business.” Consider these examples from financial services, an industry in which innovation is notoriously difficult. (…)
Example #3: The “keep the change” debit card. Bank of America has come up with an imaginative twist on the conventional debit card. Here’s how it works: The customer uses a debit card to make a small purchase (say a cup of coffee). It costs $1.50. The bank will round the purchase cost up to the next dollar (in this case $2) and put the value of the rounded amount into the customers’ savings account. Moreover, the bank will put a bonus of 5% of the saved amount on top of the savings, up to a total of $250/year. As of this writing, the program has been credited with attracting 2.5 million customers in less than one year, to open more than 700,000 new checking accounts and one million new savings accounts. These customers also “churn” less than typical customers. BOA estimates their retention rate at 95 percent.
