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Opinion: Banks should reimagine their rewards to compete in the digital age

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The landscape of banking is evolving rapidly, with regional and community banks facing new challenges in attracting younger demographics while competing with the rise of online and neobanks.

In this dynamic environment, the concept of rewards checking accounts is undergoing a significant transformation, with one idea in particular carving a path forward – fractional investing.

Fractional investing allows individuals to buy a portion of a stock rather than a whole share, making it possible to invest in high-priced stocks with smaller amounts of money.

This approach democratizes investing, enabling more people to participate in the stock market, regardless of their financial situation.

For decades, cash back has been the primary reward system offered by financial institutions, but for the consumer its utility is limited. Once received, cash back is typically spent and gone.

Enter a new rewards system built for the digital age: stock rewards checking. This innovative product introduces a new dimension to rewards, allowing customers to earn a percentage of their debit card transactions back to be redeemed for fractional shares of popular stocks.

This modern checking product is not only changing the way banks think about rewards but how they can appeal to the highly coveted tech-savvy, socially conscious Gen Z demographic.

The advent of fintech and the increased popularity of investment platforms like Robinhood and Acorns paved the way for integrating investment features into traditional banking products.

These platforms showed that there was a substantial market for easy-to-access investment opportunities, particularly among younger generations who were less inclined to engage with traditional financial products.

The appeal of a rewards system rooted in Wall Street extends far beyond traditional cash back rewards. For younger demographics, especially those who have been hesitant to enter the world of investing, accounts like this represent an opportunity to dip their toes into the stock market without needing substantial capital.

By earning fractional shares of publicly traded companies, customers can gradually build their investment portfolio using the power of their everyday spending rather than purchasing whole shares outright.

Stock rewards accounts generally require customers to maintain a certain level of activity, such as making regular purchases with their debit card, which can help further embed the account into their everyday financial routine. By offering a stock rewards account, a bank can enhance customer loyalty, generate additional interchange fee income and solidify its position as a trusted partner in their financial journey.

For regional and community banks, facilitating a stock rewards program likely requires partnering with a fintech company who can help them enhance their offerings and compete more effectively in the digital space.

By integrating stock rewards seamlessly into everyday spending, these partnerships can provide customers with a unique and valuable experience that can help set local banks apart.

By making stock market participation more accessible and integrating it seamlessly into daily financial activities, banks offering these accounts can attract and retain customers who value both convenience and the potential for long-term financial growth. This approach not only differentiates these banks in a competitive market but also encourages custom ers to maintain an active and engaged relationship with their financial institution.

In this competitive landscape, reimagining the traditional rewards product represents a new frontier for regional and community banks, where rewards can extend beyond cash back to the wealth-building power of investing.

By embracing innovation and meeting the changing needs of their customers, these banks can continue to thrive in the digital age while staying true to their community-focused roots.

Brandon Ayers is vice president and director of retail banking for OMB Bank in Springfield. He can be reached at


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