Rethinking Primary Financial Institution Status as Customer Loyalties Fracture
By Suman Bhattacharyya, Contributor at The Financial Brand
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Banks and credit unions have long seen net new accounts as markers of growth. Adding more accounts grew the customer base and a long-term runway for more revenue.
“Early on in the neobank or niche-bank revolution, you had banks really looking at account growth,” says Peter Longo, vice president of product at Finastra. “They were just crushing it with net new account growth, but not necessarily profitability.”
But as promotional offers multiplied and switching costs fell, customers began mixing up their financial lives, opening multiple accounts, chasing rates and bonuses while keeping their primary accounts open. J.D. Power data from October 2025 show that 52% of new checking accounts, 48% of investment accounts, and 65% of credit cards are additional accounts.
Today, having a bank account no longer means the customer has a lasting relationship with an FI. Many maintain only minimal balances or use their so-called primary account as a pass-through. As Ron Shevlin, chief research officer at Cornerstone Advisors, explains, a bank account can function as a “paycheck motel” — primary when the ACH deposit lands, but the funds eventually end up elsewhere.
Need to Know:
- Account growth ≠ relationship growth. Net new accounts once signaled momentum, but today they often reflect rate-chasing and bonus-hopping — not loyalty or profitability.
- “Primary” has become porous. Many consumers keep multiple active accounts, using one as a pass-through “paycheck motel” while balances and value migrate elsewhere.
- PFI still matters — but not how banks think. Primary status is shifting from account ownership to behavioral signals like income flow, usage, engagement and wallet share.
- Profit follows priority, not exclusivity. Research shows primary relationships drive materially higher deposits and fee revenue, even as customers spread products across providers.
- Winning primacy now means earning gravity. Banks that become a customer’s financial home base — through relevance, repeated use and segment-specific value — can stay primary without owning everything.
Still, for banks and credit unions, PFI status is seen as a lofty goal that requires identifying which customers actually drive revenue. The idea, though, is slippery. As customers use different providers for spending, saving, lending and investing, banks are being forced to rethink what “primary” really means, moving the focus from account ownership to engagement, usage and profitability prospects.
“Today, primary status is far less about account ownership and far more about behavior and engagement,” says Jennifer Simmons, vice president of growth strategies at ADVANTAGE, a software provider serving community banks and credit unions. “In today’s environment, primary FI status is no longer about exclusivity — it’s about priority.”
The Business Case for Prioritizing PFI
The assumption behind a PFI-centric strategy is that customers are more profitable when they treat a FI as their central hub.
That initially meant a checking account. It eventually became the tool for customers to spend, save, borrow and seek out new products. Recent industry research from Curinos shows that customers with a primary PFI deliver materially higher ROI, generating eight times higher fee revenue, ten times more average deposits, and a stronger operating-to-reserve deposit mix than non-primary customers. The bet banks are making with a PFI-focused approach is that primary account holders will stay loyal and reward their banks by taking up more products and services as they navigate life stages.
“I think it’s [a] very valid” metric, says Neil McHugh, managing director of deposit strategy and programs at Univest Bank and Trust. “I do think over the last couple of years, it’s become increasingly layered and or complex based on a number of things … including market dynamics and consumer behavior.”
PFI as a More Fluid Concept
In recent years, changing consumer behavior patterns are challenging the PFI concept. Ron Shevlin of Cornerstone Advisors argues that the idea has already eroded for much of the market. Consumers under 45, he says, are spreading their loyalty across brands, focusing on the financial products that best meet their needs rather than committing to one institution.
“This is definitely predominant among Gen Zers and millennials in that they have a primary checking account, they have a primary credit card, they have a primary brokerage account,” he says. “The idea that they have a primary FI is kind of a foreign concept for most younger consumers.”
In a December 2024 survey of 2,500 U.S. adults by Cornerstone Advisors, Gen Z consumers were far less likely than baby boomers to tie “primary” status to traditional bank relationships. Just 35% of Gen Z cited direct deposit as the reason an account is primary, compared with 61% of baby boomers.
Behaviors like direct deposit no longer guarantee loyalty or profitability, says Shevlin. Many consumers route income through one account only to move funds elsewhere for saving, investing or borrowing. The checking account may anchor daily payments, but balances, assets and long-term value often sit somewhere else.
Others echo that skepticism, even if they stop short of declaring PFI obsolete.
Neil McHugh, managing director of deposit strategy and programs at Univest Bank and Trust, says traditional markers like “main checking account” or direct deposit no longer map cleanly to where customers actually keep money or generate value. The result is not the disappearance of primacy, but a far more fluid and situational version of it.
Neil Stanley, CEO of The CorePoint, warns that holding a customer’s primary checking account does not necessarily mean capturing their wallet share. The notion that either a bank is “primary” or it isn’t masks how customers actually behave as they add products across providers suited for specific needs.
“Customers don’t close accounts anymore,” Stanley says. “They just move the money,” leaving institutions with transaction volume but limited balances.
From Ownership to Priority
But practitioners working directly with community banks argue that dismissing PFI entirely misses what institutions are actually trying to measure.
Jennifer Simmons, vice president of growth strategies at ADVANTAGE, says the concept hasn’t disappeared, but it’s evolving.
“Primary status today is far less about exclusivity and far more about priority,” Simmons says. “It’s about where income flows, where spending happens, and which institution customers turn to first when a financial need arises.”
Rather than treating PFI as a product-count exercise, Simmons says banks are increasingly defining it through behavioral dominance: the share of income inflows they receive, debit card usage, digital engagement, and whether balances reliably return after moving out. These signals provide a more realistic picture of relationship strength than account ownership alone.
Customers may maintain multiple financial relationships, yet still organize their financial lives around a single “home base.” In that sense, PFI isn’t about owning every product, but about earning gravitational pull.
Boston Consulting Group defines primary bank relationships as those in which the FI captures roughly 60% to 80% of a customer’s money flows, reflected in more than 10 to 15 monthly payment transactions, at least one recurring transaction, high digital engagement, materially higher relationship balances and lower attrition (less than 2-3%).
Building Wallet Share and Engagement for Smaller FIs
For community banks and credit unions, the path forward starts with abandoning the idea that any institution can, or should, own a customer’s entire financial life. Experts say these institutions are better served by focusing on clearly defined customer segments where they can deliver value, whether that means serving a specific geography, supporting workers in a particular profession, or addressing needs tied to how those customers manage money day to day.
“At some point you’ve got to pick a lane,” says Nikhil Lele, EY Americas consulting banking and capital markets leader. “There are multiple pathways to reach primacy. It’s not one singular approach.” This means deciding whether to focus on relationship-driven banking, become the primary place customers pay and move money, or compete on trust and engagement as their financial home base.
For community banks and credit unions, Shevlin points to affinity-driven growth as a more practical way to compete: think products designed for gig workers with uneven cash flow, checking accounts that integrate credit score reporting and other financial health tools, investment capabilities built directly into checking, or offerings tailored to specific professions.
In 2024, Arizona-based Vantage West Credit Union, for example, launched a digital-only sub-brand specifically for freelancers called HUSTL. Rob Hoyle, chief people and technology officer at Vantage West Credit Union, says HUSTL catered to the needs of independent workers with irregular cashflows.
“We created some tools, or at least packaged some tools together, that would meet their specific needs … like cash flow management or invoicing and accounts receivable, building that in so you don’t need Quicken or QuickBooks,” he says.
The credit union also developed a product aimed at easing the path to homeownership, a 40-year fixed-rate mortgage designed to lower monthly payments for first-time buyers. Hoyle adds that outreach to affinity customers must be paired with careful use of data, warning that even large institutions get it wrong when marketing is disconnected from actual customer behavior.
Ultimately, banks earn modern primacy through repeated behavior, not through product ownership, Simmons argues.
“When an institution consistently delivers value through everyday interactions — combining convenience, reliability, and support — it can maintain primary status even as customers engage with multiple financial brands,” Simmons said. “That’s what modern primacy looks like: not owning every relationship, but earning the role of financial home base.
