My previous blog charted the rise and decline of checking accounts. This blog considers how smart banks can repurpose them for the modern age as transactional accounts. This requires more than a name change – it needs investment in technology to elevate the role of this account as a crucial and integral customer touchpoint. Let’s explore how technology can help position transactional accounts at the intersection of where banking meets life.

From Banking Products to Customer Experiences

As challengers often prove, harnessing the power of modern tech can make banking more exciting and customer centric. Transactional accounts empower customers to optimize their cash use. And, with open banking, customers are no longer tethered to a single bank but may choose a portfolio of banks and accounts to meet their specific needs and aspirations. The key message is that in the world of banking we’ve entered a new age of customer empowerment. Banks must do more than offer an attractive interest rate or low/no fees to attract and retain customers. They need to wake up to a new dawn where traditional banking products are supplanted by customer experiences.

New Tech, New Opportunities

 In the digital age it’s safe to say that One Size Fits None. Customers expect banks to compete on much more than price. Through a modern and digital lens, transactional accounts are intelligent, customer centric and helpful. They use automation and artificial intelligence (AI) to offer customers timely and meaningful advice, for example prompting users with an option to move surplus funds to a higher yielding savings account or offering convenient auto financing when the customers start shopping. Such value-added functionality helps increase customer engagement and builds loyalty – and, with the right technology and strategy, banks can build much deeper and lasting customer relationships as a result.

Cognitive technologies are becoming mainstream in banking. Most banks offer chatbots as a first line of customer support. Powered by AI – including machine learning and natural language processors – these virtual assistants often use speech and text recognition to answer routine questions. While helpful in their own right, chatbots offer a mere glimpse of how technology can redefine and enrich the customer experience.

Forward-looking banks harness data science and behavioral analysis to learn about each customer’s individual spending and saving habits and to provide bespoke financial advice in real time. Some banks go even further, for example bundling accounts with customized portfolios to create personalized wealth management capabilities for their customers.  

Innovate, Innovate, Innovate!

As banks seize the chance to get closer to their customers, Big Tech and fintech have important roles to play in modernizing and transforming the role of transactional accounts. Under this arrangement, such accounts are effectively “stored value” entities within the larger banking ecosystem. This is the essence of Google Plex, which a number of banks are exploring as an option to modernize.

Innovation is essential and transformative. Recent innovations launched by various banks include:

• Low-cost branchless bank accounts with no ATM fees, non-sufficient funds fees, free checkbooks, and digital apps

• Free checking accounts designed for freelancers, gig workers and solo professionals with tools that simplify and automate tax savings; early payday options for account holders with direct deposit; “emergency buckets” that enable savings transfers; real-time alerts; and expense categorization

• Free business checking accounts for startups with fee-free business banking; no minimum or maximum deposits; and integrations to third-party apps

• Checking with cash back rewards for a multitude of lifestyle favorites

• Accounts with no minimums of any kind; reimbursements for all third-party ATM fees (without exclusion); and low overdraft fees

The possibilities are truly endless. The takeaway is that with a modern technology stack and strategy, banks can design and quickly launch accounts that are distinctive and priced right – creating profitable offerings that will attract and retain satisfied (even “delighted”) customers for your brand.

Banking on Technology

To participate fully in the financial ecosystem, banks need to adopt modern technology – as well as a cultural mindset – that enables collaboration and integration. Success in open banking calls for technology that is open, flexible, and modular – application program interfaces (APIs) and an event-driven architecture help make these things possible. Furthermore, advanced technology and APIs also empower a bank to become data driven and deliver unique customer experiences, in real time. Banks do not need to create all these things from scratch, that’s the beauty of best-of-breed ecosystems.

Moving Ahead

A wave of change is washing over global banking. Bankers cannot stop the tide, but they can learn to surf. Banking has become a technology business, but this is most likely not a core competency of most financial institutions, and it is certainly a diversion from the essential business of banking. Technology partners can bridge this gap; finding the right partner can play a pivotal role in helping banks thrive in a growing financial ecosystem.

As I’ve said before, the new age of competition is also one of collaboration. Together we can, and will, move ahead.