Big threes of checking

StrategyCorps’ own consumer research shows there are three main types of retail checking account buyers:

1. The Fee Averse Buyer – wants totally free checking or the cheapest account available
2. The Interest Buyer – wants interest earned on their balances, regardless of the rate
3. The Value Buyer – wants the most valuable account that includes more benefits than just the basics

Understanding these buyers provides the foundation for building your simple account lineup by matching the buyer type with these three accounts:

1. No/low fee account
2. Interest account
3. Flat fee-based value account

The benefits that comprise each account will vary slightly based on market conditions, but again the trend should be simplicity. Specifically, for your no/low fee account, provide one way to waive a fee, such as signing up for e-statements. On your interest account, provide one minimum balance requirement – either account-based or relationship-based, but not both.

For your fee-based value account, it’s not enough to offer basic benefits that competitors give away for free or are the types of benefits that have low usage (discounts on a consumer loan). Consumers don’t deem these benefit types as “fee worthy.” Instead, this account needs to include these three attributes to be appealing enough for members to pay for:

1. Local:  Every community loves to promote a local mindset – supporting local, buying local, etc. Credit unions already know the power of local, classifying themselves as community FIs (even the mega-banks employ this positioning).  To extend this community FI classification even further, you must become a “community connector.” For example, you can connect your consumer checking members with local businesses by offering local merchant discounts as a checking benefit. It’s a win-win for members who save money and business owners who get more exposure and sales.
2. Mobile: Delivery of products and services via a mobile app as well as benefits that revolve around the use of a smartphone are now market requirements. By delivering benefits like cell phone insurance and roadside assistance as part of your checking account (millions of consumers already pay a monthly fee for services) you save members even more money and become the provider they turn to when something unexpected happens. Discounts come back into play here too, as shopping and mobile redeemable coupons are included in the top four ways consumers want to use their mobile phones. (Find more great insight like this in the annual Fed Report on Consumers and Mobile Financial Services, 2012-2014).
3. Social: The typical social experience of checking customers is they open an account and the credit union doesn’t meaningfully communicate with them again until they have some type of issue or problem or until they come back in the branch.  Compare this customer experience to companies like Starbucks, who regularly engage customers with email messaging, social media and rewards offers. Or Amazon, who provides an easy way to evaluate prices from other retailers before making a purchase. These are social user experiences that go the extra mile on building customer connections – unexpected, unselfish and engaging.

For your value checking account to be local, mobile, and social, it’s going to take an investment to provide these kinds of benefits. Cost management is important here because despite all the value in these kinds of benefits, there’s a market based cap on the fee a member will gladly pay for a value-based checking account to be able to generate material fee income for your credit union or to justify giving it away to your best members. (No/low fee checking accounts in the market place remain the relative pricing index point for fee-based checking accounts.) Our research and experience shows optimal sales of fee-based value accounts ranges from $4-6 per month.

So if you take into account the three Big Threes with your retail checking program, you’ll deepen relationships with members with a more valuable and simple lineup, get much better financial performance from your checking account products, create an easier way to cross-sell products and make your competition envious.