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Amplify Credit Union Findings Highlight Success of Fee-Free Model
AUSTIN, Texas – When Amplify Credit Union launched fee-free banking in February 2022, many in the banking industry looked to the credit union as a test case for a zero-fee business model. Now, one year later, Amplify has shared some positive data on their fee-free model as part of their ongoing effort to encourage other financial institutions to remove fees from their balance sheet.
“When we removed fees, we also opened our door to industry naysayers who wanted to offer us their dire predictions about our revenue model,” Stacy Armijo, chief experience officer at Amplify, said. “But the results we’ve seen after one year of fee-free banking just goes to show how much we need to reform our approach to bank fees as an industry.”
“New member balances at Amplify were double the credit union’s estimates and 40% greater than the average balance of their deposit portfolio at large.”
Many of the predictions focused on the transactional behavior of new members. Despite conventional wisdom suggesting that zero fees would lead to low balance accounts, new member balances at Amplify were double the credit union’s estimates and 40% greater than the average balance of their deposit portfolio at large. Meanwhile, concerns about overdraft abuse proved unfounded: high-volume overdraft activity increased only 2% year-over-year, and Amplify has seen an annual decrease in account charge offs in six of the first nine months following their fee-free switch.
And when compared to the standard fee schedules for other Austin-based financial institutions, members saved more money with Amplify despite higher savings interest rates at other banks. “Our numbers show that members would have paid an average of $96 in bank fees over the course of the year if our fees were in line with industry averages,” Armijo said. “Meanwhile, based on their balances, those same members would’ve only earned anywhere between $25 and $65 in interest on their accounts, even at the highest-paying local institutions. That doesn’t sound like a good deal to me.”
These numbers look worse when broken out further by age. According to a 2023 study by Bankrate, the average Millennial paid an average of $192 this past year in bank fees, while the average Gen Z consumer paid $228. When compared to standard interest returns on average balances, Amplify found that younger bank customers are paying the most and being offered the least in savings.
While this data proves to Amplify that their members are benefitting from fee-free banking, it also further encourages credit union leadership to continue advocating for a fee-free approach within the industry. “We reject the notion that the customer must lose for the financial institutions to win,” Armijo said. “Our goal is not just to give back to our members – we also want to spark change for our industry, and we enter year two of fee-free banking more convinced than ever that we are on the right path.”
About Amplify Credit Union
Amplify Credit Union offers fee-free banking and award-winning lending throughout the state of Texas. In 1967, the organization was founded as the credit union for IBM employees in Austin. Today, it provides digital-first banking and lending services to over 50,000 members, including home loans, checking & savings accounts, commercial lending, and more. In addition, Amplify has been named a Top Workplace in Austin for three years in a row, and this year was named a Top 50 Workplace in the USA. The organization is rooted in its mission to improve the financial lives of its members and uses the proceeds from that to provide a safe place to call home for those without. Join us at www.goamplify.com.
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