This week, Bank of America announced it’s doing away with free checking for customers who don’t (or can’t) maintain a daily balance of at least $1,500 or sign up for direct deposit. The decision has caused something of an uproar, and for credit unions, an opportunity.
Mega banks, which have been disappointing customers for years, continue to unabashedly demonstrate that their chief priority is profit. Products that require investment, even those that help their customers live a financially healthy life, are increasingly finding themselves on the chopping block. The slashing of free checking, and many other moves like it, appears to be a blatant disregard for the shifting financial habits and preferences of consumers.
Several emerging trends point to the continued need for free checking. Here are just a few:
Gig Economy Workers Earn Differently
Direct deposit is not a given for everyone. In fact, for some, it’s not even an option their employer provides. And with increasing participation in the Gig Economy, even fewer consumers in the future may have access to direct deposit from their jobs.
Americans Use Their Money Right Away
Twenty-four percent of adults say they have no money saved for an emergency. Many people in the U.S. are living paycheck to paycheck, struggling to pay their monthly bills (one of which should not be a $12 fee for “free” checking.) Indeed, free or low-fee financial services continue to be important to today’s consumers.
Traditional Checking is Backbone of Emerging Payments
The degree to which a consumer is digitally engaged with a financial institution directly impacts the likelihood of recommending that FI to their friends. Digital consumers want to pay in a way that is easy, intuitive and highly secure. They also expect to be able to send and receive payments instantly. Today, many digitally transformed transactions are enabled by the traditional checking account.
Financial Consumers Are Choosey
Earning (and maintaining) primary financial institution status with a consumer is becoming more difficult as competition both increases and diversifies. Lose the main deposit account to a competitor, and you risk losing the entire relationship.
Credit unions, there has never been a better time to prove you are different!
Consumers are fed up, and this latest move from Bank of America, will only bolster their resolve to make a switch. Get out there and speak loudly to both members and prospects. Tell (and show) them that people, not profits, come first at your cooperative.