Return to Basics Cuts Costs and Helps Sales
What to Keep and What to Shed
With the reduction in the number of checking accounts, the focus is moving to the types of accounts. What do you keep and what do you shed? The business of checking is getting back to basics and shedding the multiple types of checking accounts. The Moebs study identified four primary types of checking accounts in use: 1) Interest Checking, 2) Free Checking, 3) Senior Checking and 4) Basic Checking with a minimum balance and fee for not meeting the minimum. “The other types of checking,” suggests Moebs, “are being phased out with the exception of electronic checking and relationship checking. The former is very cost effective and the latter can support a profitable relationship.”
|Checking Accounts Types|
Banks, Thrifts & Credit Unions
The “Loss Leader” Still Needs to Break Even
Checking, with its cost of approximately
An FI pays interest on checking to generate deposits, offers free accounts with the potential of revenue from user errors, incents seniors to increase funds on deposit, and gives checking away to retain the relationship or obtain money market accounts or time deposits. While other types of accounts may provide promotional opportunities, cost is dictating the design and design is limited to what will get checking portfolios to break even. And this leads to the benefits of technology to reduce costs.
Electronic Checking is the Future
Moebs notes that the
Source: Fed 2012 Payment Study,
12/2014 and Moebs $ervice Analysis
About Moebs $ervices, Inc.
Moebs Services, an independent economic research firm established in 1983, collects statistically significant, primary empirical data about financial institutions’ services, pricing, operating expenses and financial condition.Data is then analyzed in a counter-intuitive manner, resulting in solutions that make sense. Moebs is offering a special Risk and Pricing Program on
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