Have traditional checking accounts become obsolete?
Consumers have many places to put their money, and can move it quickly out of traditional transaction accounts. This makes "classic checking" less valuable for banking providers than it was in the past. Experts suggest building new packages that solve consumers' problems and serve them better.
For decades the checking account was the pin in the center of the map of every consumer banking relationship. It defined “primary financial institution.” It was the account that most consumers lived out of, paying bills from it and getting paid into it. Even as “checking” involved fewer checks, these accounts still connoted “centrality” and “primacy” for institutions. They served as the starting point for hoped-for cross-selling.
But experts says that Americans’ relationship with this longstanding account category may be evolving, and, along with it, the concept of being a consumer’s primary financial institution. This is coming at a point where financial institutions face a changing deposit growth and acquisition market, now that the “safety-first” phase that followed the financial crisis has passed.
The implication is that checking accounts must evolve into something new — something substantive, beyond a new name. And not just to please younger generations either. Research shows that even older Americans would move their business to newer providers of checking alternatives.
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