As many banks break the unpleasant news to consumers about the disappearance of checking account perks, PNC Financial Services Group Inc. has developed a way to make customers feel empowered about the changes.
A button displayed to users of PNC's online-focused Virtual Wallet account provides an instant and actionable way for consumers to switch to a new checking account if they are unhappy with the changes to their current one. It's called the Supercharge button — a brand that plays up the benefits of the destination account. If Virtual Wallet customers do not opt in to switch accounts, they will stop earning debit rewards and most ATM fee reimbursements in September.
By offering customers "the one-click choice" of whether to change accounts, PNC has "totally skirted the forced migration to a new account type" that most banks are doing, said Edward R. Woods, principal at Mindful Insights LLC, a research firm in Portland, Ore.
PNC has "put the end user in control," Woods said. "People like to be in control."
The Supercharge button, which appeared March 27, stands in sharp contrast to the approach at other banks, such as that of JPMorgan Chase & Co.
One of JPMorgan Chase's letters explicitly blames the Durbin amendment to the Dodd-Frank Act for the end of debit rewards and steered customers to credit products rather than provide options for altering their checking relationship.
At the beginning of March, PNC announced changes to its checking account lineup, including Virtual Wallet, a group of three accounts tailored for customers who prefer online interaction. One change was to cut the account's benefits down the middle, asking customers to keep one half or the other by choosing whether to switch.
Those who choose to stay with the classic Virtual Wallet account keep the perks of having no monthly fee or minimum balance requirement but give up debit rewards and most ATM fee reimbursements.
Those who Supercharge to the Performance account keep debit rewards and ATM fee reimbursements but must maintain a minimum balance or deposits if they are to waive the account's $10 monthly fee. The Performance account also does not charge fees for writing checks, whereas Virtual Wallet assesses a 50-cent per-check fee after the first three checks each month.
Woods said one benefit of PNC's approach is that if it works as advertised, it's completely self-service. PNC saves money by handling this conversion online rather than requiring customers to speak to a representative at a branch or call center.
PNC would not make an executive available for an interview. In a post Monday on the Pittsburgh company's Inside the Wallet blog, Mike Ley, a vice president in the e-business and payments group, said the changes to Virtual Wallet were due in part to new debit card regulations, but he emphasized to customers that "the choice is yours … with a couple of clicks."
Jacob Jegher, a senior analyst for the market research firm Celent, said that as more banks change the terms of their checking accounts, they must also have a straightforward process in place to try to retain customers who are no longer happy with those accounts.
As a current customer looking to open a new account at the same bank, "if you're going to have to make a call to a call center, sign a form and mail in two other documents as proof of whatever, then yeah, this is going to be a headache and maybe you'll switch because it's much easier for you to go online and open an account elsewhere," Jegher said.
But in PNC's case, he said, "All you have to do is click 'switch,' " and "there's something compelling about that."
He warned, however, that the process needs to work as advertised.
In a test of the Supercharge process on March 27 by American Banker, PNC's system displayed an error message, suggesting the switch did not work — even though by the next day it was clear the change had gone through.
A spokesman for PNC said customers' issues that day were minor and quickly resolved, and that overall the Supercharge launch went smoothly.
Still, Jegher cautioned, "any hiccup … presents the risk of attrition."
Banks, he said, are especially at a disadvantage when they start taking away benefits, such as debit rewards, that may have attracted the customer to the account in the first place.
"Once you give a customer something, to take it away is one of the worst things you can do," Jegher said.
This is why banks have to go further than simply offering an alternative account, he said. "There have to be real benefits."
Jegher said it is noteworthy that PNC would waive the fee on its Performance account if users kept a $1,500 balance, which is lower than the $2,000 balance Virtual Wallet currently requires for users to qualify for ATM fee reimbursements.
Jegher recommended merchant-funded rewards as a lure for customers to switch to a new account, even if that new account carries fees that they do not pay today.
"The harsh reality is that banking is going to cost money," he said.
James Van Dyke, the principal and founder of Javelin Strategy and Research in Pleasanton, Calif., said some consumers would rather pay a monthly fee than give up certain perks.
"People don't switch banks over fees as much as you'd think they would," Van Dyke said. "They typically only switch banks when they feel forced to," such as when they move to an area where the bank has no branches.
In a consumer survey Javelin conducted in November, just 27% of respondents said they had switched banks because they were paying too many fees.
The primary reason consumers switched banks was that they had moved away from the bank's branch map, which 34% reported doing.
"The average consumer is willing to pay more fees, but it needs to be done at a click of a button and it needs to be for things that have true value for the consumer," Van Dyke said.
For example, consumers are willing to pay a fee for expedited online payments, he said.
Woods said that other banks could follow PNC's example, but that the online experience PNC built for Virtual Wallet makes it especially well suited for this kind of account-switching tool.
"It makes it a little more complicated with a more traditional bank … and a more traditional user base," Woods said.
PNC saves money by making the account-switching process self-service for a customer base that is primarily online; most banks would have to put more emphasis on mailings and branch interactions, Woods said. "If it's an online-only account, [it's a] slam dunk if you're going to be copying" PNC's approach, he said. "If your account is more traditional, then if you're going to be going down the road of copying this, you need to think about the offline channels."
