Consumers Don’t Really Want Portable Checking Account Numbers

According to a study conducted by BT and YouGov, 61% of US banking customers want portable banking account numbers. As reported by The Financial Brand:

“The research, which surveyed more than 6,500 people across six countries, found most consumers agreeing that a portable account number — one allowing them to switch banks without changing account details and causing major disruptions — would be useful.”

My take: No way. US consumers don’t want a “portable” banking account number (can’t speak to consumers in other countries, though).

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There’s an old marketing parable (?) that “people don’t want a drill, they want a hole.” This talk of portable banking account numbers is the same thing. 

What people want is less hassle closing accounts. If you tell them a portable banking account number will accomplish that, then, sure, they’ll tell you that they want portable banking account numbers. 

We want portable phone numbers across carriers because we tell so many people our number that switching numbers is a pain. Plus, I have a really cool number (because I’m a Yankees fan in Boston — remind me to tell you that story one day), and there’s no way I’ll give it up. 

But you’ve got to be one really strange nerd to know your checking account number, and be adverse to giving it up. 

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This kind of research scares me. 

Why is BT and YouGov asking US consumers if they want portable bank account numbers?

BT stands for British Telecom, no? Go back to England, BT. We have enough crappy telcos in this country, already, thank you very much. 

YouGov, on the other hand, according to its website, “is a professional research and consulting organization, pioneering the use of technology to collect higher quality, in-depth data for companies, governments, and institutions so that they can better serve the people that sustain them.”

The people sustain the government? Huh?

If this research is aimed at influencing US policy on making it easier for consumers to switch banks by creating portable account numbers, they better be careful what they ask for. 

After all the Dodd-Frank disasters, I wouldn’t expect our government to have any foresight on unanticipated consequences, but government attempts to make it easier for consumers to switch banks by mandating portable account numbers will backfire.  

The cost of deploying this scheme is way beyond my ability. But I will bet that two things will happen:

1) FIs will pass the cost on the consumers, and

2) FIs will deploy other tactics to make it tough to switch — like 2-year contracts like the telcos use. 

In an interesting article on Financial Brand, Mike Branton of Strategy Corps reports on research that shows that consumers express a willingness to pay for what Mike calls “lifestyle financial services” like identity theft alerts and credit score reporting.

Want those services for free? No problem. Just renew your checking account contract for another 2 years, and we’ll throw in ID theft alerts for free. 

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Each year (at least for the past couple of years that I’ve seen research for), no more than 10% of US consumers switch banks. And it’s not for certain that it’s a different 10% each year. 

Why do we need a government policy that adversely impacts the other 90% to serve the 10%? Is that “fair” (which seems to be the mantra of the current administration)? 

It’s not like a policy mandating portable bank account numbers will help the unbanked. They don’t have account numbers. 

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Making it difficult to switch bank accounts is a fundamental element of Porterian (you know, Michael Porter of Harvard) strategy: Create barriers to exit.

Does this it make it inconvenient for the minority of consumers who want to switch? Yes.

But, boo hoo. We have bigger issues in the financial services industry to fix than this.  

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There’s another disconnect in this situation, as well. 

While there’s no doubt that (many) banks make it difficult to switch — out of them, that is — there seems to be no shortage of banks (and credit unions) touting how easy it is to switch to them.

This is just one example. There are plenty of other examples I could have included, especially from credit unions.

So, is it easy or not? 

If it is, then we certainly don’t need portable account numbers. And if it’s not, then there are a lot of FIs make false advertising claims.

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