Beyond Account Ownership: Redefining Primary Financial Institutions in a Digital Age

For decades, banks and credit unions measured success by the sheer number of new accounts acquired. This growth metric, often driven by aggressive promotional offers and the ease of opening new accounts, was seen as a clear indicator of an expanding customer base and a strong path to future revenue. However, as the financial landscape evolves, driven by digital innovation and changing consumer behaviors, this traditional view of account growth is proving increasingly misleading.

“Early on in the neobank or niche-bank revolution, you had banks really looking at account growth,” observes Peter Longo, vice president of product at Finastra. He notes that while these new entrants were “crushing it with net new account growth,” this didn’t always translate into profitability or deep customer relationships.

The Shifting Sands of Customer Loyalty

Today, the concept of a “primary financial institution” (PFI) is undergoing a radical redefinition. Customers are no longer committing to a single provider for all their financial needs. Instead, they are adeptly navigating a multitude of options, opening various accounts to chase better rates, bonuses, or specialized services, often while keeping their original primary accounts minimally active. Data from J.D. Power in October 2025 revealed a striking trend: 52% of new checking accounts, 48% of investment accounts, and 65% of credit cards were additional accounts, not primary ones.

This fragmentation means that merely possessing a customer’s bank account no longer guarantees a lasting, profitable relationship. Many so-called “primary” accounts serve as little more than a “paycheck motel,” as described by Ron Shevlin, chief research officer at Cornerstone Advisors. Funds may arrive via direct deposit but quickly migrate elsewhere for saving, investing, or specialized spending, leaving the original institution with minimal balances and limited engagement.

The core message for financial institutions today is clear:

• Account growth doesn’t always equal relationship growth. High numbers of new accounts can mask a lack of true loyalty or profitability, often driven by rate-chasing rather than deep engagement.
• “Primary” status has become fluid. Consumers maintain multiple active accounts, using one for income flow while balances and value reside across various providers.
• PFI is still vital, but its definition has changed. True primary status is now indicated by behavioral signals such as consistent income flow, active usage, strong digital engagement, and significant wallet share, moving beyond simple account ownership.
• Profitability follows priority, not exclusivity. Research consistently demonstrates that primary relationships yield substantially higher deposits and fee revenue, even if customers distribute their financial products across different institutions.
• Earning primacy means building “gravity.” Banks and credit unions must become a customer’s financial home base through relevance, frequent usage, and value tailored to specific segments, rather than attempting to be the sole provider for every financial need.

The Business Case for Modern PFI Strategies

Despite the complexities, a PFI-centric strategy remains crucial because customers who view an institution as their central financial hub are demonstrably more profitable. Recent industry research from Curinos underscores this, showing that customers with a primary PFI deliver significantly higher ROI. They generate eight times more fee revenue, ten times higher average deposits, and a stronger operating-to-reserve deposit mix compared to non-primary customers.

Institutions are betting that primary account holders will exhibit greater loyalty and expand their product holdings as they navigate life stages. Neil McHugh, managing director of deposit strategy and programs at Univest Bank and Trust, affirms that PFI is “a very valid” metric, though he acknowledges it has become “increasingly layered and or complex based on a number of things… including market dynamics and consumer behavior.”

PFI: A Fluid Concept, Especially for Younger Generations

Changing consumer behavior, particularly among younger demographics, actively challenges the traditional PFI model. Ron Shevlin of Cornerstone Advisors contends that the concept has largely eroded for a significant portion of the market, especially for consumers under 45. These younger generations, he notes, spread their loyalty across brands, prioritizing products that best meet specific needs over committing to a single institution.

“This is definitely predominant among Gen Zers and millennials in that they have a primary checking account, they have a primary credit card, they have a primary brokerage account,” Shevlin explains. “The idea that they have a primary FI is kind of a foreign concept for most younger consumers.” A December 2024 Cornerstone Advisors survey of 2,500 U.S. adults highlighted this generational gap: only 35% of Gen Z cited direct deposit as the reason an account was primary, compared to 61% of baby boomers.

Behavioral indicators like direct deposit no longer guarantee loyalty or profitability. Many consumers route income through one account only to quickly move those funds elsewhere for specialized saving, investing, or borrowing. While the checking account may facilitate daily payments, the true value and long-term assets often reside elsewhere. Neil Stanley, CEO of The CorePoint, summarizes this shift starkly: “Customers don’t close accounts anymore. They just move the money,” leaving institutions with transaction volume but diminished balances.

From Ownership to Prioritized Engagement

Despite skepticism about traditional PFI, many practitioners argue the concept hasn’t vanished but rather transformed. Jennifer Simmons, vice president of growth strategies at ADVANTAGE, emphasizes that “Primary status today is far less about exclusivity and far more about priority.” It’s about which institution receives the main income flow, facilitates most spending, and is the first choice when a financial need arises.

Instead of merely counting products, institutions are increasingly defining PFI through behavioral dominance. This includes the share of income inflows, debit card usage frequency, digital engagement levels, and whether balances consistently return after temporary transfers. These signals provide a far more accurate picture of relationship strength than simple account ownership.

Customers may indeed maintain multiple financial relationships, yet they often still organize their financial lives around a single “home base.” In this evolving landscape, PFI isn’t about owning every product, but about earning a powerful gravitational pull. The Boston Consulting Group defines primary bank relationships as those where an FI captures roughly 60% to 80% of a customer’s money flows, evidenced by over 10 to 15 monthly payment transactions, at least one recurring transaction, high digital engagement, significantly higher relationship balances, and lower attrition rates (less than 2-3%).

Strategies for Smaller FIs: Earning Wallet Share and Engagement

For community banks and credit unions, the path forward involves acknowledging that no single institution can, or should, aim to own a customer’s entire financial life. Experts advise focusing on clearly defined customer segments where they can deliver exceptional, targeted value. This might involve serving a specific geographical area, supporting workers in a particular profession, or addressing unique daily money management needs.

“At some point you’ve got to pick a lane,” advises Nikhil Lele, EY Americas consulting banking and capital markets leader. “There are multiple pathways to reach primacy. It’s not one singular approach.” This means choosing whether to excel in relationship-driven banking, become the preferred platform for daily payments and money movement, or build trust and engagement as the ultimate financial home base.

Shevlin highlights affinity-driven growth as a practical competitive strategy for community FIs. This could involve developing products tailored for gig workers with irregular cash flows, checking accounts integrated with credit score reporting and financial health tools, embedded investment capabilities, or offerings specific to certain professions.

A prime example is Arizona-based Vantage West Credit Union, which launched HUSTL in 2024, a digital-only sub-brand specifically for freelancers. Rob Hoyle, chief people and technology officer at Vantage West, explains that HUSTL caters to independent workers with irregular cash flows, offering tools like cash flow management, invoicing, and accounts receivable features, eliminating the need for separate software.

Vantage West also developed a 40-year fixed-rate mortgage to ease homeownership for first-time buyers by lowering monthly payments. Hoyle stresses that such targeted outreach must be meticulously combined with data analytics, warning that even large institutions often misstep when marketing efforts are disconnected from actual customer behavior.

Ultimately, modern primary status is earned through consistent, valuable behavior, not through exclusive product ownership, as Simmons articulates. “When an institution consistently delivers value through everyday interactions — combining convenience, reliability, and support — it can maintain primary status even as customers engage with multiple financial brands. That’s what modern primacy looks like: not owning every relationship, but earning the role of financial home base.”

Source: Thefinancialbrand.com