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Big Banks Surrender Mass Market Consumers To Other Institutions

In an age where consumers have come to expect nearly everything for free, most big banks have stopped offering free checking accounts. As a result, they are pushing many mass market consumers to other institutions.

By Rob Rubin, Managing Director, Novantas

In a previous column we examined data showing that only 21% of big banks offer free checking accounts. The data below demonstrates that eliminating free checking accounts has made big banks less appealing to many mass market consumers.

In May 2013, users who selected an account with a big bank had daily balances that were 78% higher than mass market shoppers choosing accounts with small institutions (less than 100 branches). It’s clear that without free checking products, big banks are pushing many mass market shoppers to other institutions.

Large Banks
(1000+ branches)
Regional Banks
(100-999 branches)
Small Institutions
(less than 100 branches)
Direct Banks
Mean Lowest Daily Balance $1,657 $1,585 $929 $1,142

Source: May 2013

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Shoppers with low balances are most likely to choose free checking accounts – which most big banks don’t offer – and shoppers with higher balances are more likely to choose fee-based accounts:

  • 54% of shoppers with lowest daily balances under $1,000 chose a free checking account compared to 20% of shoppers with balances of $5,000 or more.
  • 67% of high balance shoppers chose checking accounts that have monthly fees of $10 or more – in most cases their high balances will enable them to avoid the fee. Only 16% of low balance shoppers chose accounts with high monthly fees.
Type of account selected $1,000
or less
$1000 to
$2000 to
Free checking 54% 45% 37% 20%
$10 or less monthly fee 30% 32% 26% 13%
$10 to $20 monthly fee 14% 19% 31% 34%
$20 + monthly fee 2% 3% 6% 33%

Source: May 2013

Insights from Rob RubinRob Rubin is Managing Director of Novantas Data Services. His research leverages insights captured from thousands of bank shoppers every day while they are actually thinking about- and in the process of shopping for a new bank.

All content © 2017 by The Financial Brand and may not be reproduced by any means without permission.

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