The Great Checking Account Migration: How Marketers Grab Growth in 2024

Data suggests that nearly 7% of the U.S. population has changed their state or city of residence since the pandemic. Now that they've settled in, millions may consider banking closer to home just as the banking loyalty landscape becomes lackluster.

When banks and credit unions assess checking account saturation, the picture can appear bleak. The latest data suggests that 93% of people already have a checking account. But does that mean new account growth will be inordinately difficult this year?

It’s just the opposite. Perhaps more people are considering changing where they keep their transaction accounts in 2024 than ever before. Nearly 80% of zip codes nationwide show less loyalty to their current institution than in the past. And those banking loyalty losses have come just as tens of millions of people — those who moved states or cities during the past three years — get serious about banking locally.

This year, the question for banking marketers is: How can we capitalize on the growth opportunities created by these macro shifts in the American population?

Domestic Migration Becomes Financial Migration

Serving people who recently moved is not a new strategy for institutions looking to acquire new account holders. What is new is the sheer scale.

According to the National Association of Realtors, 32 out of 50 U.S. states have net-positive moving rates every year, meaning that more people are moving to them than moving out of them.

Data from the Census Bureau backs that up: 7.9 million Americans moved to a new state in 2021 and 8.2 million in 2022. Estimates for 2023 suggest interstate migration is down 12% compared to 2022, but that would bring the 2023 volume to about 7.2 million interstate movers.

More than 23 million people moved out of state during the past three years. That’s nearly 7% of the U.S. population that has changed states for their primary residence. Add to that the 25.6 million Americans who moved in 2023, and that 7% ratio is likely only a baseline. We don’t know how many more moved away from their institutions’ branches.

Why does that set the table for mass checking account migration when Americans bank digitally today? It’s because of Americans’ idiosyncratic expectations for banking.

Inside the Great Migration:

23 million people (which accounts for about 7% of the entire population) have moved out of their state since 2021.

According to Forbes, 78% of U.S. adults prefer to bank via a mobile app or website, and only 29% prefer to bank in person. Yet, when polled by Statista in 2022, nearly half (46%) of the 60,000 respondents said they conducted their banking at a branch, up from 28% in 2021.

People prefer the convenience of their mobile phones, but not when it comes to decisions. About 67% see a branch in their neighborhood as a sign of a bank’s stability and availability, according to a 2022 study covered by Cushman & Wakefield.

Additionally, consumers preferred visiting a physical branch when opening new accounts, receiving financial advice, or purchasing financial products. About 62% are more likely to open an account at a financial institution closer to home, says Vericast’s 2024 Financial TrendWatch report.

People can transact from their phones for years without needing (or wanting) to visit a branch. But eventually, they need to take a financial action where they want banking staff involved.

“People want to have a provider that is close,” Chris Phelan, director of analytics and reporting at Vericast, a marketing technology firm, tells The Financial Brand. “If you’re a bank that wants to grow your market share, now is an opportune time to go out and attack that. Engage potential clients who are looking near their [new] home.”

Loosening Loyalty

If a bank has a checking account relationship with a household, it has historically had a strong chance to serve most of that household’s other financial needs. That remains true, but checking account loyalty is fraying.

Transaction accounts tend to be pretty sticky. Account holders must manage significant changes — though technology diminishes these barriers every year — to take their financial relationships elsewhere. Yet, even with that practical hurdle, about 48% of people still say they are now willing to consider switching to other providers for some or all of their financial needs, according to Vericast.

At the same time, 57% say they are most likely to stay with their institution — unless they receive what they consider to be a “strong” offer from a competitor. Recent reports suggest consumers are receiving strong offers and taking them.

In the first half of 2023, nearly half of the checking accounts opened in the United States were opened by digital banks and fintechs, according to Cornerstone Advisors. This lack of loyalty to traditional banking providers partly comes from Square‘s and PayPal‘s products, which enable a range of activities that are only possible with multiple bank accounts, Cornerstone’s Ron Shevlin observes. But that’s not the only reason. In addition to domestic migration, the banking map has changed for people who didn’t expect that change.

“If you’re a bank that wants to grow your market share, now is an opportune time to go out and attack that. Engage potential clients who are looking near their [new] home.”

— Chris Phelan, Vericast

Since 2020, banks have closed 6,912 branches. Credit union branches are down as well, but only by 0.6% in 2023 compared to 2022. Alongside branch closures, some 573 banks and 613 credit unions have merged since 2020. Even those who didn’t move may now have a new banking map in their area.

“Loyalty isn’t dead, but it’s teetering in a way not seen before. Right now, that’s true for most industries, from restaurants to big box stores. Now it’s crept into banking,” Phelan says. “About 78% of zip codes have declining loyalty, according to S&P. That represents an enormous opportunity to go out and get new clients. Institutions also risk that other players will lure clients away if they do nothing.”

Delivering a ‘Strong’ Offer

With checking account loyalty dipping so much in 2023, institutions will need to pivot quickly to provide strong offers to account holders in 2024. Otherwise, their window of opportunity may close as millions find a new home for their transaction account.

Ramping up a marketing campaign in time may be possible, but what needs to happen for them to provide strong offers to the 57% of consumers who are looking?

Many institutions turn to companies like Vericast to manage the cost and accelerate the timeline to launch effective campaigns. The service begins with data.

“We can look at how long people have lived in a certain area, how long it’s been since they’ve bought a house, the geographic distance from branches, and the number of banking competitors, and we can paint a picture of how open that area is to change,” says Phelan.

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“Then it comes down to understanding the demographics you’re advertising to,” he adds. “What we’re looking to do with Checking Engine is to go out there and find those consumers who are looking or willing to change, and then we’re making the best offer based on what we know about them.”

Vericast can also match willingness with capacity to use banking products by looking at average and individual household wealth, checking and savings account data, debt levels, and more.

Strong = A Well-Placed Offer

Making strong offers for checking accounts requires institutions to become “surgical in their marketing by considering preference for different kinds of advertising,” says Phelan.

A strong offer, though, is not necessarily driven by promotional rates. Winning an account can be as simple as messaging within channels preferred by a campaign’s recipients.

For example, while 44% of Americans overall prefer direct mail and postcard offers, that is only true of 37% of Gen X consumers, 26% of Gen Z and 19% of millennials. “Different household demographics are more sensitive to particular channels and more responsive to particular channels,” Phelan observes.

“You can use the mass marketing sledgehammer approach and hope it works — that’s been the way that marketing has happened a lot in the past — but it doesn’t have to be that way.”

— Chris Phelan, Vericast

Given 67% of consumers say they are more likely to respond to offers from financial institutions they are familiar with, banks and credit unions that want to prevent attrition can respond quickly by adding products and services to the relationship with the help of marketing services supplied by companies like Vericast.

Either way, engaging quickly with effective targeting will save institutions marketing costs and secure new or current transaction account relationships, says Phelan. He adds Vericast customers have reported a 22% increase in customer responses to highly focused campaigns.

“You can use the mass marketing sledgehammer approach and hope it works — that’s been the way that marketing has happened a lot in the past — but it doesn’t have to be that way,” he says. “There’s a wealth of information out there to tell you about the market you’re advertising to and how to be smart about how you spend your money.”

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