Despite naming its product Virtual Wallet, PNC Financial Services Group Inc. has decided that its Web-centric bank account should be firmly grounded in the real world.
A new account option announced this week, paired with a new policy set to take effect in September, indicates that PNC is more interested in attracting customers from within its branch map than from the farthest reaches of the Internet.
In its current form, Virtual Wallet accounts can be opened online and encourage electronic payments instead of paper checks. If a minimum balance is met, PNC also reimburses foreign ATM fees, a move that further distances the relationship from the branch.
But this week, PNC said customers of its Performance checking account may begin using Virtual Wallet’s personal financial management interface, though the bank prevents them from signing up for it online. Performance customers must speak to a branch or call center representative.
And while Performance customers are still eligible to get their ATM fees reimbursed, that option will be eliminated in September for existing Virtual Wallet users.
“My bet is that [PNC] is seeing higher attrition rates among Virtual Wallet account holders outside their branch footprint,” says Ron Shevlin, a senior analyst at Aite Group LLC. “By reimbursing for foreign ATM fees, PNC is hurting the profitability of accounts that are less likely to grow into more profitable accounts.”
Mike Ley, vice president in the e-business and payments group for PNC, says the changes should not alienate most Virtual Wallet customers, as 80% began their relationship in a branch.
“We found when we listened to customers, they wanted to go [to a branch] and meet somebody and open an account,” he says. After enrollment, “a vast majority of all interactions happened online,” he says.
Virtual Wallet is based around three accounts, labeled Spend, Reserve and Growth. The first is a checking account, the second a short-term savings account for overdraft protection, and the third a long-term savings account. Customers can move money among these accounts by adjusting an on-screen slider, called the Money Bar, and can establish specific savings goals within their view of the Growth account.
The Spend account is a free checking account with no minimum balance requirement. Consumers are entitled to write three paper checks per month without incurring a fee. After that, the bank charges 50 cents per check.
Performance checking account holders are required to keep $1,500 in combined balances, a limit PNC announced March 1 it would decrease from $2,500. If these account holders turn on Virtual Wallet, they will retain their ability to write unlimited checks without incurring a fee.
Virtual Wallet debuted in 2008, originally targeting Generation Y (which PNC defines as ages 18 to 34). In 2009, PNC created a student version to serve the younger members of that audience.
Adding Virtual Wallet to its Performance account would make the tools more useful to Gen Xers and Baby Boomers–some 20% of Virtual Wallet account holders now are older than Gen Y, the bank said.
“The things we have for Virtual Wallet, including transparency, organization, calendaring, and the Money Bar resonate not only with Gen Y, but an older demographic, up to age 45,” Ley says. “We continue to add to Virtual Wallet and we will hopefully make people better money managers.”
Stessa Cohen, research director of banking industry advisory services at Gartner Inc., says the new demographic PNC is targeting may not necessarily be online banking customers.
“They may not want to turn on [Virtual Wallet] online, and they may want to have a face to face interaction,” she says.
Nicole Sturgill, a research director at TowerGroup in Needham, Mass., says PNC’s recent changes are “a logical next step” for the account. PNC “probably got a lot of interest outside of Gen Y, and this lets them expand their scope,” she says.
Sturgill adds that PNC has been making changes to Virtual Wallet over time that foreshadowed its move to pursue an older and more profitable audience.
In July, PNC changed the Virtual Wallet to link transaction information for customers holding the bank’s credit cards. Also last year, PNC enabled Virtual Wallet with a joint calendar view so that joint account holders could simultaneously see all their scheduled bill payments in one consolidated view.
“The credit card gives them a larger product set to offer to a larger demographic,” Sturgill says.
Ley agrees. As customers’ financial lives “get more complex, we will allow them to do more” with the Virtual Wallet, he says.
