In a recent study by Ron Shevlin of Cornerstone Advisors, commissioned by StrategyCorps, consumers are asked about their interest in a hypothetical Amazon-offered checking account bundle, and the results reveal a meaningful lesson to banks and credit unions – consumers are willing to pay for value in banking products.
Nearly half of 30-something Millennials said they would pay $5-10 a month for an Amazon checking account, including cell phone protection, ID theft protection, roadside assistance, travel insurance and product discounts. Less people from all age segments (Millennials, Gen Xers and Boomers) said they would open a free checking account from Amazon, without the bundled services.
Almost 60 percent of people would at least consider switching accounts if their primary financial institution offered this same type of checking account. Plus, more people in fee-based accounts are referring their bank or credit union than those in free accounts.
Shevlin not only describes the biggest threats to checking accounts, he offers a prescription for how mid-size financial institutions ($500 million to $20 billion in assets) can reinvent their checking accounts by phasing out free checking and instead bundling checking accounts with packages of value-added services targeted to specific consumer segments.
Cornerstone Advisors’ research study, commissioned by StrategyCorps, is packed with insights about how financial institutions can evolve their checking accounts to thrive in the new subscription economy. The complete white paper can be downloaded here.