Executive Summary

Our latest research report Accessorizing the Checking Account builds on our previous research (Reinventing Checking Accounts, available here) that retail checking products are more important than ever in a consumer’s decision about where to primarily bank. Providing traditional, commodity-like checking benefits won’t win the battle for a consumer’s primary banking relationship.

The competition is fierce as the megabanks (Chase, BofA, Citi, Wells) are overwhelmingly winning across all demographic segments (Millennials, GenXers, and Baby Boomers) in the fight for the consumer’s primary checking account. Regional banks are a distant second, and all other FIs are way further behind (see Table A). The megas are successful due to ample financial resources and investment in technology and marketing.

However, while this financial resource availability gives them the upper hand, it’s not necessarily the winning hand. Why? Examine the benefits of the megas checking products. You’ll find they’re still basically vanilla in terms of actual benefits other than sprinkles of short-lived digital superiority. What’s missing from the megas and other FIs is shown in Figure 2 – a relevant rewards program as part of a checking relationship (relevant doesn’t mean today’s debit card rewards).

That’s the market opportunity for all other FIs battling for the checking customer – winning over consumers by smartly “accessorizing” the checking account with rewards today’s consumers want and need. The megas don’t offer rewards like cell phone insurance, roadside assistance, fuel rewards, price matching, pharmacy discounts, and more and thus should be provided by other FIs currently losing the battle to them.

These rewards are in such demand, and consumers are already buying them from someone else other than their FI, typically as a stand-alone product. Bankers that find a way to embed them into a checking account economically and successfully deliver them digitally will not only better meet these consumer needs but also materially differentiate their products from the megas.

There’s also a handsome financial return to FIs who embrace this value-added reward approach. Consumers readily expect, accept, and participate in subscription-based fee models. Amazon, Spotify, Netflix, AAA, and Costco have more than paved the way for acceptance by consumers of the subscription model (as shown in our previous research) for relevant rewards. With an appropriately configured checking account, an accessorized checking account can deliver a guaranteed, recurring monthly fee to help offset an FI’s fluctuating non-interest income. 

This research details precisely what today’s consumers are telling bankers they want in checking account rewards beyond traditional benefits. It shows which rewards relevantly connect and meet the modern consumer’s needs and wants. Incorporating this research into your FI’s retail checking strategy will help compete against the dominating megas and also deliver material and stable financial returns to diversify non-interest income and replace declining revenue.

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