Study Examines Consumer Motivations In Choosing Checking

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What drives consumer decision on where to get a checking account?

That question is behind a new study from the Filene Research Institute, which finds the chief reason is convenience- but it also finds somewhat different motivations between credit union members and bank customers.

The study, "Marketing Checking Accounts to Members: A Guide for Credit Unions," uses data from the Fed's Survey of Consumer Finances. Authors Jinkook Lee and William Kelly found that in addition to convenience (primarily office location), other important criteria are low fees and minimum balances; having a wide range of services available at one location, and personal relationships.

The authors caution, however, that credit union marketers should focus on key sub-groups in developing marketing strategies for checking accounts. That's because households with checking services only at a credit union rank buying criteria differently than do bank-only customers. Credit union households rank personal relationships, low fees and minimum balances, and having a wide range of services available at one location, as their top criteria. Bank customers are more likely to value convenience.

The study examines a number of other variables related to determining where a consumer obtains a checking account, including years with the institution, size of checking balance, education, total financial assets and age. For example:

Households with more than 10 years at their institution are much less likely to list fees as important, but are much more likely to demand a wide range of financial services.

For those with more than $5,000 in their checking account, having a wide range of services is the most important criterion.

Those with less than a high school education value convenience more than low fees.

Young adults (age 18-34) prefer low fees and are less interested in a range of services, and more influenced by personal relationships in deciding where to obtain checking services.

According to Filene, to be most effective credit union marketers also need to understand how consumers decide where to obtain checking services. To understand this process, the authors convened focus groups to provide background for marketing strategies.

Two types of decision-makers emerged:

"Relationship shoppers" perceive products and prices to be similar across institutions. They shop for the institution they prefer to deal with and acquire most of their products there. The "relationship shopper" typically has a primary financial institution. "Marketing strategies aimed at this group should stress institutional characteristics."

"Product shoppers," by contrast, perceive significant variations in products and prices. This group shops several financial institutions, comparing prices and product features. They are less likely to have a primary financial institution. CUs should market to this group by focusing on particular product features and prices.

"This research is an important instrument in the marketer's tool box," says Bob Hoel, Executive Director, Filene Research Institute. "It demonstrates that perceptions of prices and quality in the marketplace strongly influence consumer buying decisions. The decision-making process is also affected by perceptions about membership, community ties, convenience, and trust."

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