DESIGNING CHECKING ACCOUNTS FOR TODAY’S CONSUMERS (July 2016)

Pricing and Product Design

Online and Mobile Access

Packages; Value-Added Services

Key Finding from the Report:

Results from SYNERGISTICS 2015 study, Checking Account Acquisition and Retention, found that most checking holders believe they have a free account with no monthly fees or service charges, no minimum balance requirements, and no transaction charges. A minority are aware their account has fees or service charges that can be waived by meeting certain requirements.  To what extent do consumers still perceive they have free checking?

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Highlights of the Study

This study evaluates the consumer checking account market exploring strategies for designing checking products.  It examines pricing, packaging, access methods, value-added features, and online services.

 

National Internet Survey – 1,000 consumers age 18 or older.

Key Dates

April 29, 2016 – Charter fee/Intro pricing ends.

April 29, 2016 – Final acceptance of comments on questionnaire.

July 2016 – Project Report available.

Strategic Questions

  • Do household checking accounts continue to fit the conventional image of being a stable financial relationship? What degree of volatility exists in terms of recent account opening or share shifting?  What are the factors or motivations influencing any market movement?  Is multiple checking account usage an issue in the marketplace?
  • Can providers strengthen the checking account relationship with various “value-added” services and benefits? Is there positive response to relationship reward programs?  How important are features such as free ATM access, overdraft protection, and debit card “on/off” capability?
  • To what extent has the checking account become an online or digital experience for certain customer segments? What is the behavior profile in terms of devices used and activities performed in the digital environment?  Does there continue to be growth in adoption of mobile RDC?  Is there potential for digital “no check” accounts?
  • Are there opportunities to improve customers’ satisfaction with the checking account relationship? How wide is satisfaction overall?  What specific features or aspects – such as customer service, pricing, or access channels – represent areas for possible improvement?
  • Should providers be concerned about converting the small segment of consumers who do not have checking accounts? What reasons or motivations drive this non-adoption?  Can this segment’s needs be met by alternative products?
  • What checking account pricing arrangements have been accepted by consumers? Is there still a wide perception of free checking in the market?  How receptive are consumers to alternative fees, minimum balances, or activity requirements for various checking features or benefits?
  • How should checking account design be tailored to specific customer segments?  Can checking account features, services, and benefits be “matched” to certain demographic, behavioral, or attitudinal traits?

Research Issues

  • Checking accounts are the heart of most financial relationships.  Today, depository institutions can offer an array of checking account products ranging from basic to more complex versions. Accounts can be designed and promoted for specific segments such as teens and students, while virtual checking accounts have been designed to appeal to millennials. Additionally, there are premium level checking accounts designed for high balance customers.  Mobile apps that link checking and savings accounts are also appearing. In addition, a variety of features can be provided including overdraft protection, account management tools, and rewards.
  • Checking account providers promote the convenience aspects of checking accounts and the ability to make deposits with a mobile device.  While the days of totally free checking may be behind us, many consumers have accounts that are fee-free but have balance and transaction activity requirements.  Free access to ATMs nationwide can be an extremely attractive checking account feature. Overdraft protection is an important aspect of checking accounts.
  • Providers now offer the ability to apply for checking accounts online, as well as features to encourage switching behavior.  While applying online is convenient, it also represents a missed opportunity for developing a face-to-face relationship.  For some consumers, traditional checking accounts may be a thing of the past.  As new types of accounts and features continue to appear, it is important for depository institutions to measure consumer behavior, attitudes, expectations, and needs. [F244]