Why would consumers show more interest in a fee-based account from Amazon than a free account? One reason is surely the value-added services bundled in. But there’s another reason: Consumers have learned (the hard way) that a free checking account isn’t really free. 

As one bank customer, commenting online, put it: 

“The issue isn’t wanting enhanced services for free, it’s the lack of transparency. The $50-new-account offer advertised “free online banking” but did not disclose the $7.95/month ACH service fee on the offer itself. I don’t begrudge banks charging for their services; I do begrudge their lack of transparency.” 

The business rationale for free checking accounts is that a free checking account enables FIs to acquire a customer and then cross-sell their way to a deeper—and more profitable—relationship. 

However, the data does not support this hypothesis and our findings are clear:

Compared to free checking account holders, a larger percentage of consumers with a fee-based checking account referred others to their primary FI and grew their relationship by adding non-deposit products. 

Learn more by downloading and reading Reinventing Checking Accounts today.