By Ray Birch
LAKE FOREST, Ill.—Big Checking—that is, organizations with more than one-million checking accounts—keeps getting bigger at the expense of smaller institutions, including credit unions, a new study shows. However, there is a solution to the challenge for smaller shops, says one economist.
The latest data from Moebs $ervices reveals institutions that have more than one-million checking accounts—or Big Checking—have slipped from 30 to 28 since June, but their overall share of the checking market keeps climbing.
“Twenty eight FIs rule consumer checking,” said Michael Moebs, economist and CEO at Moebs $ervices. “Collectively, they have more than 400-million transaction accounts (T-accounts), which is 74% of the entire national consumer checking market.”
The big players have added 4.2 million checking accounts since the start of 2022. Participants in Big Checking include, at number one, Walmart, with 105.2 million transaction accounts and 19.4% of the national market, and Bank of America at number two with 67.2 million accounts and 12.4% of the market. Chime and USAA are members of this group, as well.
Credit unions in this category are Vienna, Va.-based Navy FCU (8.7 million), State Employees CU in North Carolina (1.6 million), and Seattle-based BECU (1.1 million).
The T (Account) Rex
At the end of 2021 there were members of the Big Checking club, reflecting the addition of bank and the disappearance of two others due to acquisitions, along with another bank that purged its checking account portfolio and fell below one-million accounts.
“Tyrannosaurus rex was the largest and most fearsome dinosaur of all time. Big Checking has 28 financial institutions with one million or more T-accounts. These are the T-Rexes of financial services,” said Moebs.
Moebs suggested one big concern is that while Big Checking members are grabbing greater share, they are slowly learning to do so more profitably.
“More Big Checking members are moving toward profitable checking,” said Moebs. “Volume of transactions increases with lower prices, which increases net revenue.”
Additional Findings
Moebs pointed out the latest Moebs Checking Survey data show more than 85% of all depositories lose money with checking.
“This forces FIs to sell not just checking but a relationship to get auto loans, mortgages, and credit cards,” he explained. “The consumer wants free checking. Only 12 FIs of Big Checking, or 43%, offer free. Of the 12, five FIs do not charge for an overdraft.”
Moebs pointed out that most Big Checking members offer consumers only one checking account.
“This is the most efficient way to profitably sell checking,” he said.
Moebs noted the biggest player, Walmart, has achieved profitable checking.
Michael Moebs
Other findings from the latest Moebs $ervices checking study include:
- Walmart is becoming even more dominant in checking accounts
- Fee prices are falling
- The number of checking offerings per FI are falling
One Solution
As Big Checking steals accounts away from credit unions, Moebs believes the solution for small FIs is to focus on making new and existing checking accounts profitable through multiple service relationships.
“This relationship approach will be successful for the smaller institutions and is a means for checking survival,” said Moebs, who pointed out Walmart is aware of this opportunity. “Most community banks and CUs do not have the resources to get to Big Checking. Community banks and CUs need to emphasize relationships. For example, sign up for CU’s checking and get the best auto loan deal. Walmart cannot do this—at least for now.”