Competitive conditions mandate credit unions increase focus on checking

In our work with credit unions across the United States, we experience a variety of perspectives about checking. For most, it is part of doing business, but not necessarily a concerted point of focus. Who could argue, as the credit union industry has shown steady annual growth in checking accounts almost 6% since Bank Transfer Day in 2011. However, recent trends suggest some slowing of growth. And as “quiet” as the market for checking appears to be, there are massive shifts afoot that should be examined.

To begin with, the dominance of the large banks is insatiable. According to Novantas, in 2017, 45% of all new accounts were opened at Bank of America, Chase and Wells Fargo. Why is that? Because all offer superb digital experiences, provide overall convenience and are continuously in the market with acquisition offers up to $600. While none of the big three offer “truly free” checking, most have qualifiers as low as a $250 direct deposit, so the value exchange with their customer base is strong. All focus on checking, and the results speak for themselves.

There are also new elements of competition. “Challenger banks” such as Chime, a U.S.-based digital bank, are now well established. They compete with No Fee Checking, Account Protection (No ODs), and an “Uber-like” digital experience. Chime has opened two million fee-free online checking accounts and is adding more customers each month than Wells Fargo or Citibank (over 250,000). Some may recall the December fiasco of Robinhood, where a new cash management account (aka checking) was offered for sign-up, but then discontinued. Similar to its brokerage services, it featured no fees, along with premium interest and a strong digital experience. The account was eventually rescinded, but had over 850,000 people on the wait list within a month.


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