The speculation around Amazon’s potential entrance into banking has only heightened, thanks to the recent reports of Amazon being in talks with big banks like JPMorgan Chase and Capital One. While it’s unlikely that Amazon actually plans to become a bank itself, these types of partnerships further reveal that getting in on the banking action is moving up on its “take over the world” to-do list.
Ask bankers how they go about designing their retail checking products and most will answer with much more of a focus on the checking part than the retail part. Don’t get me wrong, the checking part is essential. The account has to be operationally secure, reliable and accurate in terms of supporting transactions and related information. However, customers have overwhelmingly shown they aren’t willing to pay for just checking. To be different, to generate much needed fee income and to really change the game of checking, banks must focus more on the retail part of retail checking. Here’s why.
In summary, about 40 percent of consumer checking accounts are so “shallow” that they don’t generate enough income (net interest income and fees) to cover the estimated annual costs to maintain and service the account. Plus, this 40 percent only contributes 2.7 percent of all checking-related revenue and 1.4 percent of total relationship dollars.