The Stickiness of a Checking Relationship

In the January 2020 monthly AARP magazine, there is an article, Why You Should Search for a Different Bank.

There are four generic options listed: a national bank, a community bank, a credit union and a virtual/online firm.

The article provides brief pros and cons for each choice along with average rates from last October for two loan and two deposit options. But what struck me as important was the opening facts. Checking accounts are very stable relationships.

The Longevity of the Primary Checking Account

One 2019 survey cited that 40% of Americans have never switched banks.

A 2017 survey by Money magazine stated that the average primary checking account stays at the same financial institution for 16 years. People over the age of 65 have held their primary checking for 26 years.

No wonder banks are willing to pay as much as a $600 bonus to acquire new checking accounts.

The Business Analyst’s Challenge

The data suggests an interesting metric to track–the length of a member’s checking relationship, by age cohort. Obviously older members should have longer relationships.

Some questions that might be asked: How does the credit union’s checking loyalty compare with national averages? Are online competitors eroding the relationships of younger members versus persons in middle age?

More strategically, how might one predict that a member is likely to close their primary checking account in the next six months (or any forward time period) based on closed account statistics and related activity data?

PS: In 1985-1986 AARP received a FCU charter from NCUA to serve its nation wide members.   The CEO hired of  the de novo startup was P.A. Mack, the former NCUA board member.   The charter was  given up after approximately one year’s effort.   Might such a charter make even more sense today?

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