While a majority of consumers report being pleased with their checking account experience, 22% report having used an alternative banking product, according to poll results from the TD Bank Checking Experience Index.
The Index is a nationwide survey of more than 1,500 consumers with checking accounts at various financial institutions. According to the results, 86% of consumers rate their day-to-day experience with their checking accounts as excellent or very good (compared to 83% in 2013), and 85% of consumers say their banks are excellent or very good when it comes to accessibility. However, 22% of survey respondents with bank accounts say that over the last three months they have used alternative banking products such as check cashing services (12%), money transfer agents (11%), and payday loans (4%).
According to Ryan Bailey, EVP, head of retail deposit and payment products at TD Bank, some of the most common reasons for this are the fees associated with checking account products. Some banks also have a more stringent screening process to determine who can use such products.
But Bailey still believes that the "one-stop shop" of financial services that banks offer is still the most convenient, and banks need to aim to better retain these customers who are using some alternative banking products. When it comes to fees, he says, it's not so much that consumers are against fees, but rather are upset by hidden fees.
"Transparency is the key. Customers don't like surprise fees. You need to be clear up front what the fees are." He adds that banks should also use the technology at their disposal to offer consumers convenience they can't find anywhere else, such as mobile remote deposit capture.
The poll also found that debit cards and online banking play central roles in the banking behaviors of today’s consumers. A large percentage of those surveyed reported that their experiences with debit cards and online banking are excellent or very good (92% and 91%, respectively). Of the 23 banking transactions that checking account holders report making each month, on average, 10 are debit card purchases and 6 are conducted through online banking, according to the survey.
Across all survey respondents, 60% of checking account owners said their debit card is an essential service. An even larger number of millennials (74%) report that they "can’t imagine not having a debit card." When it comes to online baking, 51% of consumers cite it as their preferred channel to conduct checking account transactions. Bailey notes that, while mobile payments are gaining popularity, they haven't "taken on a stronghold like debit cards have."
Perhaps unsurprisingly, the poll found that the two main reasons for switching banks are fees and life events. Of the 8% of respondents who reported closing or switching checking accounts in the past two years, the main reason for doing so was a life event such as moving (29%), followed by bank fees (27%).
Bryan Yurcan is associate editor for Bank Systems and Technology. He has worked in various editorial capacities for newspapers and magazines for the past 8 years. After beginning his career as a municipal and courts reporter for daily newspapers in upstate New York, Bryan has ... View Full Bio