RDS SPECIAL: The Checking Account will Evolve and Branding will Make All the Difference

OK, I think we all know the writing is on the wall for checks. But just for the heck of it, I decided to attend a session at Retail Delivery called Why Is It Still Called a Checking Account? Dove Consulting managing vice president David Dove discussed with attendees the continuing decline in check volume and the rise in electronic payments, along with how branding can make a difference in banks' account acquisition and retention efforts.This observation comes as no surprise to those in the industry. Dove figures are in line with those of other consulting firms and show that check volume is declining by 4.5 percent annually. But what I enjoyed seeing and what I thought really drove home his point was some historical analysis. Dove looked back to the 1970s. "In 1975, we basically had just two forms of payments-cash and checks," he said.

Then Dove unveiled the other side of his slide to show the kinds of payments available today. Checks and cash are still around, but they've been joined by signature debit, PIN debit, credit cards, ACH debits, electronic bill payment, contactless, decoupled debit, P2P payments. "There are a plethora of access devices for customers," he noted.

By 2010, Dove said he expects the payments mix to be 80 percent electronic and 20 percent paper. This was just the opposite 20 or 30 years ago.

But the decline of paper payments is beside the point, according to Dove. He said that banks shouldn't even be calling these things "checking accounts" because people are increasingly accessing this money almost any other way but with paper checks. "We're billing it as a checking account, but consumers are showing us they prefer to use other means for accessing their money," he explained. He said banks haven't quite gotten their heads around this concept.

Part of the issue has to do with branding. He said the checking account brand is outdated. "The benefits of electronic transactions are attractive to consumers. So why do we still operate it as a legacy account?" he poses.

Dove looked at the top 50 banks and said 80 percent of them offer some kind of free personal checking account and almost all of them are branded as "free" checking accounts. Several of the top 50 banks also use ineffective adjectives to differentiate their free checking brands, he commented. Dove rattled off a humorous list of some of the names of free checking accounts that are on the market today that included such doozies as Totally Free Checking, Sincerely Free Checking, More Than Free Checking-the list went on.

Dove's point was that banks need to truly rethink their operating models when it comes to checking accounts. They need to understand that debit and other payments devices are becoming the preferred account access devices for their customers. Further, banks have to grasp the idea of branding. It's really not a checking account anymore in the traditional sense, according to Dove. To compete not just with other banks, but also with nontraditional banks and other competitors, financial institutions have to embrace the concept of branding-not branding in the functional sense so that the name of the product defines what it does. Dove talked about emotional branding-the kind of branding that strikes a deeper chord with consumers.

"Emotional brands with an edge to them have attraction in the market," he explained. "You want the brand to create a clear meaning to customers and a clear differentiation to competitors. This builds customer loyalty, reinforces purchase decisions and creates barriers to imitation."

So in a sense, Dove is saying the checking account won't so much disappear as evolve into something else. This will take some heavy creativity from banks, not only to let go of the traditional checking account as a product, but to rebrand it in a way that appeals to consumers at the level of such brands as the iPod (vs. MP3) or Ben & Jerry's (vs. ice cream) or the ThinkPad (vs. laptop).