Innovation in Checking Accounts

By Marilyn Kennedy Melia

Checking. It’s an apt name for this all-important product. It’s the one customers are always checking out.

Ongoing research is standard at large, national banks to ensure that their checking lineup is filling the many needs of diverse demographics, explains Amy Pierce of Bank Strategic Solutions in Little Rock, Ark.

Formal research may not be a continual (or even a formal) process at smaller institutions. But all retail banks place a high priority on checking. It’s the product that initially attracts most retail customers to a bank, and it can engender years of loyalty. As such, it’s top of mind for bank executives, who are always “checking” or monitoring what their competitors and peers are doing, says Pierce.

Four banks of different sizes model the ways the industry is evolving its staple financial product, from identifying market needs, keeping choices simple and attracting new or existing customers into the offering.

1. Axiom Bank: Casting a net in the wide mobile market

Jessica Ludvigsen, SVP for retail banking at Axiom Bank, occasionally picks up the phone and calls one of the managers of the Maitland, Florida-based bank’s 24 branches, asking what type of customer feedback on checking they’re currently fielding.

It’s just one of many efforts to monitor checking, which the executive team regularly reviews.

About a year and a half ago, one priority emerged: “We wanted to provide even more flexibility to the ever-increasing digital banking market segment,” says Ludvigsen.

In late 2017, the AxiomGO account was launched. Managed through a single app on a smartphone, AxiomGO is a checkless checking account with a debit MasterCard for people who want an alternative to prepaid cards and traditional checking, making it easier to manage their finances—from anywhere, at any time.

The bank also allows users to gain control over their spending with My $ Manager, an integrated personal budgeting tool.

An Axiom team, which included administrative and technical staffers, worked with a third-party provider to create the app. Now, when someone is searching for a mobile bank account, says Ludvigsen, AxiomGO should stand out in the search results.

The market is wide and includes the many snowbirds wintering in Florida. The offering also appeals to college students, and “really anyone wanting online checking with good mobile capabilities,” she adds. The bank continues to provide a personal, high-touch experience in the branches. But it expects the new offering to reach that burgeoning mobile banking customer who just doesn’t walk into branches, Ludvigsen says.

2. Bank of the West: Reaching out to the mass market

This $90 billion, San Francisco-based institution is a subsidiary of European bank BNP Paribas, and has some 600 branches across 23 states. “We conduct ongoing reviews of all our account offerings,” says Beth Hale, EVP and head of product and payment solutions for the retail banking group.

An extensive research effort focused on checking revealed a significant insight. The bank could reach many new customers across its broad footprint by offering a checking account that waived the monthly fee for customers who made a deposit of any amount each month. Deposits by ATM, in-branch, direct or mobile would qualify, but not account transfers.

“The feedback was clear that an account offering that was simple, flexible and customer-centered would be well received,” Hale says.

Last summer, Any Deposit Checking debuted. The new account joins Premier Checking as the only two options for new customers. “Any Deposit Checking did not replace accounts for legacy account holders,” Hale explains. “Those customers in legacy accounts remain in them, if they choose to do so. For example, we previously offered student checking, which waived account fees, but required annual proof of the customer’s student status. Customers as young as 13 can now sign up for the Any Deposit Checking, with a parent co-signer and monthly fees are automatically waived for any account holder under 25.”

The account “has effectively met our goals of an inclusive, accessible banking account that serves customers of all types, from younger customers to the under-banked, and to more established segments,” she adds.

3. Fifth Third: Sticking to basics, while serving niche needs

Cincinnati-based regional bank Fifth Third offers four different checking programs. That number is the result of an extensive, ongoing effort to provide a comprehensive roster of features that appeal to various segments of its customer base spread across 10 states—while still keeping the number of options from becoming too large.

“It can be confusing for customers to come in and have too many choices,” says Ben Mendelsohn, senior product manager for retail banking. It can also be bewildering to customers to add, eliminate or change features of an existing checking program too frequently. “You have to be very thoughtful,” he adds. “Any change—even positive ones—can be disruptive.”

While four plans form the basic roster, Fifth Third also responds to niche needs. With monthly reports from customer contact centers, as well as consumer surveys, the bank continually monitors customer satisfaction.

Most recently, research indicated the bank was missing “an option between our ‘Essential’ and our ‘Express’ checking,” says Mendelsohn. The latter is free of service charges, but doesn’t include check writing or check deposits at ATMs; the “Express” program waives the service charge if there’s an average monthly balance of $1,500, or the customer charges at least $500 monthly on a Fifth Third credit card, or holds a loan with a balance at the bank.

So, in May, the bank launched a pilot program in Florida, Georgia, and select markets in Kentucky and Indiana: an account with no monthly service charge or balance requirements, with free transactions at the bank and its partners ATMs, but with an introductory pack of paper checks for $10.

In keeping with its policy of careful deliberation before making any wide checking changes, Fifth Third will not roll out the new option throughout its 10-state market area unless the pilot is successful.

Moreover, in 2017 the bank announced a checking plan targeted at a very specific niche: families that include individuals with disabilities. Fifth Third’s “ABLE checking,” now available in 17 states, offers traditional checking features—like a debit card, checks and access to fee-free ATM transactions—but also allows families to set aside up to $14,000 a year in the account.

The 2014 federal ABLE law allows these accounts, which are modeled loosely after 529 college savings plans, Mendelsohn explains. The deposits in the account do not impact the disabled person’s eligibility for Medicaid and other government services.

The account isn’t opened through Fifth Third branches, only online. The state organizations that administer the ABLE accounts promote and market them. “We have worked with the states where we have local branches to help build plan awareness,” says Mendelsohn.

4. Guaranty Bank: Making a value proposition

“We made a conscious decision to streamline our checking [programs] to make it easier for both our customers and staff to understand,” explains Carlye Wannenmacher, VP and director of marketing for Guaranty, a Springfield, Mo.-based community bank. The aim was not only to simplify, but to still be able to offer plans holding appeal for “the various segments” of Guaranty’s southwestern Missouri market, she explains.

Any new offering also needed to be valuable to the bank, since some existing account types were losing money for the bank. Finding appealing checking benefits would also be key to moving customers from accounts the bank aimed to eliminate.

A “BaZing” account, which features a mobile app carrying discounts at thousands of retailers, restaurants, hotels and entertainment, as well as perks like cell phone protection, pharmacy, vision and hearing discounts, ID protection and others, has proven the right choice.

Rewards checking plans come in many varieties, with some offering cash rewards in addition to discounts. But BaZing, provided through StrategyCorps, is focused on discounted and free extras. “We find it has been especially popular with Gen Y and millennials, and growing that segment was a strategic objective,” Wannenmacher says. When she recently made plans for a family trip to Colorado, she found a valuable hotel discount.

Even when customers select one of the other two Guaranty checking plans—Eagle Checking for seniors or Advantage, which pays interest on high balances—they have the option to add BaZing for $4 monthly. Twelve percent of Advantage or Eagle customers opt in to pay for the benefit.

In moving customers from accounts Guaranty was phasing out, which included a free checking plan that carried no extra perks, employees were able to emphasize how much could be saved with BaZing, says Wannenmacher. The account itself carries a $6 monthly service charge, but that can be reduced by $1 if the customer enrolls in electronic statements, and by an additional 10 cents for every debit purchase. (Even if customers “were buying it down to a zero monthly charge,” that would be offset by earning a small margin on debit transactions, says Wannenmacher.)

With 30 percent of customer penetration, the program is perhaps most valuable as a retention tool, deepening customer relationships with the many discounts and free services, concludes Wannenmacher.

Marilyn Kennedy Melia is a freelance writer in the Chicago area. A shorter version of this article originally appeared on ABA Bank Marketing.