Strategy_Corps_2-14-13.pngThere’s no debate, the way your customers interact with checking accounts is rapidly changing – dramatic growth in mobile banking fueled by remote deposit capture, continued growth of online banking, and traditional and non-traditional competitors offering alternatives like prepaid cards. Plus, nearly half of consumers check out a bank online before visiting a branch and more and more use social media for expected customer service.

One significant outcome of this is branch traffic steadily declining about 5 percent per year on average, according to Birmingham, Alabama-based consulting firm Bancography. So the number of times your customers and prospective customers interact face-to-face with your employees to experience award-winning, competitively differentiating customer service is decreasing.

This means your bank’s hub deposit-based product, the consumer checking account, must deliver much more stand-alone appeal and built-in value to connect with customers differently and better than in the past for your bank to remain relevant in their lives. So you have to think about the importance of this customer interaction with checking accounts differently than you have in the past.

An interesting way I’ve heard this product relevance explained by a banker is from Ray Davis, CEO of Umpqua Bank, during a keynote presentation at the recent Acquire or Be Acquired Conference. Davis stated the situation this way—banks must find a way to have their customers positively think about their bank when they’re not in the branch interacting with a bank employee.

At StrategyCorps, we think about this a bit differently, yet with the same intended result. Our position is banks must provide a checking account that is so appealing, so good, and so applicable to a customer’s everyday financial activities that the customer would gladly be willing to pay for that checking account. We all know that when you pay for something, you care more about what it delivers. And if it delivers at least what you pay for it (and hopefully more), then that’s a fair exchange of value upon which to build a mutually rewarding, loyal relationship.

So exactly what does such a checking account need to offer to be more relevant? The starting point is the account offers a benefit(s) that naturally fits into a checking account and doesn’t cost so much that the price the customer pays for it is unreasonable. Remember, there’s still enough free checking out there that it remains a reference point in a purchasing comparison by consumers. In other words, it’s highly unlikely that a lot of consumers will pay $25 per month for a checking account, no matter how valuable the benefits it provides when free checking is a viable alternative in the marketplace.

Free checking has also trained consumers to strongly believe that traditional checking benefits need to be free, no matter the amount of intrinsic value of those benefits. So you have to think creatively and differently about how you design your accounts, meaning the inclusion of non-traditional benefits.

Now I know there are some of you who may be shaking your head in disagreement or disbelief or confusion, which is okay. However, the winners of the consumer checking game will be those banks that embrace the fair exchange of value requirement and figure out which non-traditional benefits need to be offered that make checking accounts more relevant to their customers, no matter how those customers decide to actually interact with your bank.


Mike Branton