Is It Time to Rename ‘Checking Accounts?’
Yesterday’s article about the archaic credit union term for checking accounts (“share draft accounts”) sparked a wider debate about the very future of what checking accounts should be called. As Bryan Link with Brightleaf Financial wonders, “The name ‘Checking Account’ implies its main purpose is writing checks, although for a growing segment this account is mainly for automatic drafts and debit card transactions.”
Key Questions:
- If fewer and fewer people are using checks, why are they still referred to as checking accounts?
- If the trend towards paperless payments continues and you look ahead 15-20 years, how many people (regular consumers, not businesses) will still be using checks? For that matter, how many people will still be using cash?
- When will paper checks become obsolete? When that happens, what will checking accounts — as a category of financial products — be called?
Are ‘checking accounts’ obsolete?
As more financial institutions respond to people’s environmental concerns, and as they increasingly shift consumers to online channels, they’ve renamed their checking accounts accordingly:
-
e-Checking - e-Account
- Green$ense
- Greener Choices Checking
- Totally Green Checking
(where you get your first box of checks free)
Key Question: If you offer a “green” checking account, why would you offer checks? In which case, why would you call it a “checking account” at all?
Some of the new names proposed for checkless checking accounts include:
- Debit Accounts (suggested by Ron Shevlin, senior analyst with Aite Group)
- Transaction Accounts
- Spending Accounts (suggested by Tim McAlpine from Currency Marketing)
- Cash Accounts (suggested by Brent Dixon, a financial marketing/design wizard)
- Virtual Accounts (suggested by Carla Day from CU Chat Up)
Further Discussion: What do you think? What suggestions do you have for the future name of “[Checking] Accounts?” What terms do financial institutions in other parts of the world use? Will people still refer to them generically as “bank accounts” no matter what name they’re given?
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Interesting point!
I have seen online only based accounts referred to as Online Bill Payment accounts. They earn interest, accept incoming/outgoing fund transfers, and you can use the bill pay for “checks”.
Another important question is this: “do we need any kind of categorical term at all?” Adopting a new name is just re-labeling the same old category (which is only a cosmetic change). As an industry, we like to be able to put products in neat little boxes with clear labels, but maybe the future of the products we currently consider “checking” will become more amorphous and harder to categorize together.
Deep thoughts!
I like cash accounts, but still feel that checking fits. As in, I’m just checking to see if there’s money to pay my bills.
That’s an interesting question Jeff. I think whether we (as an industry) apply a categorical label to checking accounts or not, the overarching questions is, “How are these accounts changing?” I don’t think it’s merely an issue of “relabeling the same old category…a cosmetic change.” If people don’t use checks, what else is changing about basic banking transactions? Would people prefer a single account that earns interest on positive balances, while charging a reasonable interest rate (without fees/penalties) when going negative?
@Editor/JP Well, you know me: I believe the future of banking is more about experience innovation than product innovation, but having said that….
I feel like I’m seeing some shifts in the way “checking” products are used. As much as it pains me to use this as an example, take a look at the now nearly cliche rewards checking product. I believe it’s changing behaviors a bit. In my own personal case, I’m using my rewards checking account as a savings account as well as checking, because the rates are substantially better than savings, MMA or CD’s products, even online-only. I already have a rewards checking account at Umpqua Bank, but today I’m actually going to open a second rewards checking account at my local CU so that I can have up to $50k combined ability to earn 2.5-3%. The hassle of tracking all those annoying debit transactions, etc. is a small price to pay for the extra several hundred bucks of interest per year I can get.
So, I see the relevance of that product beginning to shift from “my checking account is for daily transactions” to “my checking account is my only deposit account.”
We to jumped on the wagon of a green checking account, but we did stick to using no checks. It would just defeat the purpose. Some members were turned off by no checks but there were a lot of members who barely right checks and liked the idea of switching over.
I feel it will forever be a bank account to people though. It’s like brands that have become words. Take band-aid for instance, we call all bandages band-aids, its what we do!
The other thing I could foresee would be an evolution toward a single deposit and loan account a la the One Account (http://www.oneaccount.com).
In any case, my point is that I could see a continued convergence of account types and products, leaving a categorical term like “checking accounts” obsolete, regardless of what it’s called.
Braden, as I wrote the article, I thought something similar: How do terms like “band-aid,” “Kleenex” and “Xerox” fit in this discussion?
Yesterday, Tim McApline pointed out what PNC is doing with their “Save,” “Spend” and “Reserve” Accounts.
hmm feel like i am being called out on my response, but i am not sure if i took your question the right way!
I was just answering the one question you asked “Will people still refer to them generically as “bank accounts” no matter what name they’re given?”
So my answer was fitting, they will always call it a bank, even when its not from a bank. Members refer their accounts at the credit unions “there bank account”
The word “bank” is a brand in a way, no matter how you look at it!
Braden, I’m sorry. My question was definitely not an attempt to “call you out.” It was something I seriously thought about as I wrote the article. The issue is one where a product name can transcend its category to become its own concept — like J&J whose trademark “Band-Aid” is now a term for “quick fixes” and “medical adhesive strips,” and like “Kleenex” that has become a generic term for “facial tissue,” and like “Xerox” that has become both a verb and noun meaning “photocopy.”
There’s a chance that 100 years — even 200 years — from now, people will still call them “bank accounts” or “checking accounts,” even if they have no clue where the term(s) come from.
Sorry as well, its hard to judge people’s comments. I guess that’s why they invented emoticons!
In the end, good article!
One reason I don’t think we will see the generic term of “checking” accounts go away is due to the way account regulations differentiate checking from savings and money market accounts. Perhaps, it will be “transaction” accounts or something similar.
I love to see members title their own accounts. Their bill account, their house account, their vacation savings, their fun account, etc.
Love the ideas coming from the previous post and this one.
In Australia we don’t call any bank accounts ‘checking’ accounts. To be honest the term sounds old school and out dated.
Accounts typically vary from names such as ‘everyday account’ to ‘transactional account’ and sometimes you get a bit more marketing fluff like ‘choice account’ or ‘everyday savings account’.
I think if you use an account name that actually describes the purpose of the account, you can’t go wrong.
I missed this yesterday but have to say that this has been a pet peeve of mine for the past year or so. I want a name change and my favorite of those above are those that describe the account – as checking is not a very good description any more – very dated – so transaction and spending both work for me. I like to think CUs are innovative and whether it is checking or sharedraft both need updating. With the changes in the regulations coming, many of the names may be changed anyway. One of the themes at the recent BAI was “checking 2.0″ – the discussion was around banks not offering “free checking” any more……let’s get with it and have the name more reflective of how the account is actually used.
“Checking 2.0…” That’s funny Jodi. Thanks for sharing. That kind of name reflects what many have come to expect from the financial industry: a lack of creativity, and a reluctance/inability/unwillingness to acknowledge tectonic-sized shifts in consumers’ financial behaviors. “We don’t know what it is or how it’s changed, so let’s call it ‘The Same Old Thing 2.0.’”
Ha, great topic. I think you can extend the question to savings account as well. We have spent some time debating this at Geezeo. Instead of a default product mix of checking (share draft) and savings – we think there should be three default accounts:
1. Billpay account – this links to a cash flow calendar – showing you if you have enough money to pay your bills. The goal is to not paying your fixed bills with the next account:
2. Spending account – this is you day to day and discretionary spending account (debit card).
3. Goals account(s) – people are not motivated to save for the sake of saving – there should be multiple goals accounts (similar to christmas clubs in the past). For example a family could have a holiday goal, vacation goal, and home remodeling goal account. Each account should have a target dollar amount and end date – visually users should see a meter letting them know if they are on track compared to their goal plan.
The billpay and spending account would replace the checking account. Given the popularity of debit cards people are more removed from their money (just look at the amount of overdraft fees). New regulation will limit that cash cow – so it is critical that credit unions help their customers change their bad financial behavior and get a better grasp on their finances. More satisfied customers will lead to larger share of wallet.
Also, it should be easy for members to transfer money between these accounts to protect against overdrafts – alerts with easy mobile transfer capabilities will be key.
We’re in the process of developing a new type of checking/share draft/savings account that revolves around savings, with automatic sweeps. No name yet, but definitely a visit to the drawing board will be necessary. That said, I personally like the spend account, save account, and my personal favorite, “mad money” account!
Has anyone looke into how the “One Account” as described in Filene’s i3 program might fit into this question? Not only could it be a great wealth management tool, but financial institutions would benefit from additional loan penetration and activation. It is kind of like using a HELOC to pay for everything and applying you entire pay against it…as long as you do not overspend, you payoff loans quicker, save money on interest. This is a gross oversimplification, but I think it may have a role in this type of product development scheme.
That’s an interesting idea, Bill. Virgin Money rolled out a dual-purpose debit/credit card a while ago, which sparks the question, “Is this more reflective of how people relate to their money?” Perhaps consumers (subconsciously) wonder, “Why do I have to have all these different types of accounts?” Realistically, a single account isn’t a solution that’s appropriate for everyone; some people will always appreciate being able to segregate their spending from their borrowing. But I imagine that a measurable segment of financial consumers would find such a product intriguing. A lot of it hinges on how it would be structured.
Um hello! “Spending Accounts” is where its at! For money you intend to save you get a Savings Account – for money you intend to sepnd you get a Spending Acount…. !!
spend***
Until we can design a product that is fundamentally different in the consumer’s mind than the existing checking product, it will always be “checking” in a different wrapper. It will be difficult to rebrand an account that offers unlimited demand drafts as anything but checking. And it would be even more difficult to charge more for it, which is something we’re all going to have to find a way to do.
I think the downside to this rebranding would be the loss of the instant recognition that consumers have for “checking accounts.” If an ad, disclosure, or CSR mentions a “checking account” consumers instantly understand the subject of the discussion, and most will understand how the product functions. When we call a DDA product a “spending account”, “cash account”, or any other trendy new name, consumers will generally require more of an explanation as to what the product actually is than if we were to say “checking account.” Now, this is fine if the customer is face to face with a CSR, but in advertising when we have limited time to convey our message this may not be the most efficient manner to draw new customers to our institutions.
The term “checking” is so deeply rooted in our industry, and in consumer consciences, that I do not think it will ever go away permanently (albeit fun to romanticize about)…I think that in the decades to come, the term “checking account” will clearly not represent consumer behavior, but it will still carry that instant product recognition which makes the name so valuable.
I think we need to focus on what innovation in our industry really is and what it is not…
Some people above provided great examples of true innovation, while others just jumped on the naming bandwagon (no offence intended)… Even a consumer sweep account is nothing new, these products have existed for years.
PNC is a great example of product innovation….They did not just simply put a new name on the same product as many of us in the industry tend to do. They developed a new philosophy about how bank accounts can be used by consumers and they cleanly integrated it into the mobile landscape…IMHO, they missed the mark on the product branding as its website content is clearly focused on a young, teenager-esk, demographic. I think that if this product were packaged in a more mature manner, it would appeal to a much wider audience…Can that hokey Punch the Pig game be the first item to go?…We don’t need to dumb down banking to attract Gen Y, many of us are quite savvy.
Interesting item of discussion. Thanks!
Thanks for the comment Ian. You make some really great points.
Nathan, you raise a good question: If financial institutions need to start charging for checking services, is that the right time to change names? If people were accustomed to getting X for free, why not change the name to Y if you have to start charging for it?
May be. But there’s plenty of precedence for products that once were free and now are tagged with a premuim price. Water is just one. But it had to be brightly repackaged and sharply marketed to earn the price that Evian charged!
Very interesting concept! I think the term ‘bank account’ will be around whether we like it or not. As far as a new name for checking accounts…i like the suggestion above ‘virtual accounts’.
This is a great discussion. I really like PNC’s idea. I gravitate toward “Cash Account,” but I think that no matter what the industry does, consumers will use their own terms and the generic “Bank Account” is not going away anytime soon.
Interesting discussion – We brought the same issue up a few years ago on the YES CU blog here:
http://yessummit.blogspot.com/2008/02/what-is-checking-account.html
I still like the term “spending account” instead of checking – “savings account” still makes sense for saving… a nice coupling.
Thanks for the link Christopher. I remember there were discussions occurring around the web a while ago, but couldn’t remember where. I like the suggestion of “Payment Account” from the link as well — another interesting option.