The topic of Business Strategy and implications to Member Loyalty, Revenue Growth and Profitability are rather timely as Credit Unions prepare for the Annual Strategic sessions.   Specifically related to checking accounts, every Credit Union ought to be asking questions including:

  • How effective and efficient has the member acquisition program led by checking account product sales been?
  • How effective is the cross-sale plan that is based on WOWing the checking account customer into additional product sales?  How much products have been upsold, on average, to a checking account led acquisition?  How much revenue and profit have the checking account led acquisition members generated for the Credit Union?

Perhaps the experience of your Credit Union is an outlier, but the data is overwhelmingly and unequivocally negative.  That is, checking accounts are effective only at increasing the count of checking accounts (and perhaps the wallets of certain vendors who continue to sell the value of the checking account).   10 years ago, the checking account may have been the gateway to a broader wallet-share, revenue and profit growth, but circumstances have changed and the checking account is a liability – in all senses of the word – for the vast majority of Credit Unions.

The checking account holy grail myth seems to be inexhaustible.   Bankers have been armed with the perceptions of the future based on yesterday’s experience, and buttressed by some self-interested vendors, advisors, and associations who are, frankly, afraid, to ‘tell it like it is’ or worse, who don’t know any better.

Most checking accounts generate little or no revenue and the vast majority generate non-recoverable operating losses, with little or no opportunity for cross-sell into revenue-generating products. Our own prolific writing on the topic includes the following articles that illustrate the dearth of value of the checking account to the member and to the Credit Union:

The ineffectiveness of the checking account is validated yet again by a recent TD Bank / Angus Reid Public Opinion survey that polled more than 3,000 checking account consumers.

Product Ownership

TD Bank’s survey indicates that although a healthy 83% have a savings account in addition to their checking account, less than 50% have a credit card, and less than 20% have a mortgage, loan, LOC or Investments.

Consumers' Product Ownership with Primary Bank

A Small Minority of Consumers Own Products that Generate Revenues for Credit Unions’ Product Ownership with Primary Bank, TD Bank Checking Experience Index

In other words, a very small minority of members own revenue-generating products from their Primary Credit Union.  These findings are consistent with the findings of a recent Deloitte survey. More

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