October 24, 2008: Just as some marketers thought the checking account was so last year, and over-sold, comes turmoil in the marketplace.

What will customers look if they have any uncertainty about their bank, the new ownership of their bank, or the fees they are paying to their bank?  They will shop for a new checking account. 


"Checking accounts. That's the biggie," said Tad Lowrey, the bank's president, stated recently during an interview with the L.A. Times. "If you build a checking base you can cross-sell other products to customers, and it's tougher for them to leave."

Checking accounts provide a reliable cash stream of from customer deposits, account fees and other revenues—just what most banks need to help rebuild reserves.  Lowrey added, "The credit markets are broken. And these deposits are the cheapest funding source available."

Goldman Sachs Group Inc. and Morgan Stanley — the last of Wall Street's big investment banks — became bank holding companies in order to accept deposits that could help them remain viable.

Even credit card giant Capital One Financial Corp. is looking for deposits. Capital One has acquired banks in Louisiana and New York, while Mutual of Omaha purchased a bank with branches in Arizona, Nevada and California. General Motors Corp., with its GMAC Financial insurance arm, recently lobbied federal regulators to allow it to continue taking deposits.

The perceived safety and security of traditional banking institutions is apparently appealing to customers as well, judging by the success of CapitalSource Bank.

Source: Banks and customers show more interest in checking accounts, by William Heisel, Staff Writer, Los Angeles Times, September 23, 2008.