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Checking in on Checking Accounts

  • Wendy Coburn

    Wendy Coburn

Created at February 19th, 2020

Checking in on Checking Accounts

Every year at Christmas I give my nieces and nephews a prepaid card so they can buy exactly what they want.   Some of them are in college now and living independently, and I was thinking about myself at their age, and how independence and money are linked. 

It was important to me to have my own money from a very young age.  Like learning to drive, buying something with my own money was a rite of passage.  I had a passbook savings account when I was a teenager, and I had to actually go into the bank to deposit and withdraw funds.

My first banking experience was analog in the extreme. 

Their first banking experiences, these Gen Z’ers, is the furthest thing from analog.  They use that thing attached to their hand – their phone – to do everything.  None of them write checks – they use Venmo and other methods to access their money.  This begs the question – why is the checking account still called a checking account?  Shouldn’t it be called something that has more to do with paying for things, like a “money access” account, or “cash storage account”?   

Several factors make the emerging payments landscape especially challenging for banks.  First, they are still organized in product silos despite the changing ways consumers access their funds.  The checking product leader is not always accountable for the bank’s payment features such as person-to-person payments or digital wallets.  In fact, those payment features likely cannibalize each other from a revenue perspective and undercut the debit card as a payment device.  This organizational conflict can result in dislocated messaging to customers and fragmented experiences.

Perhaps the banks should group their payments, debit and checking products under one leadership and strategic umbrella.  Maybe they should be called “everyday banking” or “today’s money” instead of “checking” and “payments.”  Certainly, the bank compensation structures for these products should be interrelated; otherwise their customer strategies never will be.

Finally, consumers will continue to find new ways to interact with their money, as they’re being trained by super brands to park small amounts of money in apps so they can use their phones to pay for coffee and other necessities.  This deposit displacement is a troubling trend for banks.  Consumers now divert funds into health spending accounts, and have apps for coffee, for shopping at certain stores and for paying their friends back.  The checking account is more like a pit stop for their paycheck than the long-term parking garage of the past.

Many banks report that improving customer experience is a top concern and strategy for 2020, along with digital transformation.  To make these strategies come alive they’ll need to look at how they’re organized and incentivized, how their products work together and how they’re telling the story to their customers.    

In the meantime, I’ll continue to learn from my nieces and nephews and my own kid about all the things I can do with my phone that don’t include talking to people.