Beyond Checking: Building Stronger Banking Relationships in the Digital Age

For decades, the checking account was the undisputed king of customer relationships in banking. Secure the checking account, and you’d secured the customer, laying the foundation for deposits, payments, and future lending. This traditional viewpoint, however, is rapidly becoming a relic of the past as the financial landscape evolves.

The Evolving Landscape of Banking Primacy

The concept of checking account primacy is no longer a given. Customers are increasingly diversifying their financial activities, spreading deposits and transactions across multiple institutions. This fragmentation means customer loyalty is no longer fixed but highly fluid. Here’s what you need to know about this significant shift:

• Fragmented Loyalty: Customers are less tethered to a single institution. Instead, they distribute their financial activity across several banks and fintechs, diminishing the sole importance of the primary checking account.
• Payments as the New Battleground: The real competition for customer relationships now lies in owning daily payment behaviors. Institutions that provide seamless, convenient payment experiences are earning the right to deeper customer engagement, with deposits often following convenience.
• Accelerating “Soft Churn”: Many customers are opening new primary accounts without closing their older ones. This “soft churn” masks a loss of primacy that traditional banking metrics often fail to capture, making it harder for institutions to identify when they are losing their foundational relationship.
• AI as an Enabler: Artificial intelligence is emerging as a powerful tool for community institutions. It enables seamless digital experiences while simultaneously freeing up staff to focus on high-value, human-centric relationship building.
• Future of Primacy: By 2026, primacy will belong to institutions that can dominate everyday financial behaviors and cultivate trust for significant life decisions, focusing on winning key moments rather than perpetual ownership.

Data from JD Power’s annual retail banking satisfaction study reveals a stark reality: 69% of bank customers now hold deposit accounts at multiple financial institutions, a trend that has steadily climbed since 2024. On average, customers juggle two to three deposit accounts, and one in five recently moved funds from their primary bank to chase higher interest rates, superior savings programs, or attractive cash-back offers.

This fragmentation runs deeper than just account numbers. Customers might direct deposit their paycheck into one bank, use another’s debit card for spending, park savings in a high-yield account elsewhere, and manage bill payments through a fourth. While these transfers are often not large sums (typically under 30% of total deposits), they signify a quiet yet significant diversification of financial relationships without outright account closures.

“Primacy is dead,” asserts Jim Perry, senior strategist at Market Insights, Inc. He explains, “Too many bankers continue to think about this through the old model — where we can gain a relationship and own it forever. The question shouldn’t be ‘are we the primary bank?’ but rather ‘for which moments, for which needs, for which behaviors are we going to be primary and for how long?’”

Where True Primacy Resides: The Payment Experience

The new frontier for achieving customer primacy is undoubtedly the payment experience.

Bhavna Kaushal, a banking and payments consultant with Payments+Partnerships, highlights the clear hierarchy in modern banking relationships. “Their daily financial hub, for the most part, is through payments,” Kaushal states. “Whether it’s day-to-day payments that you’re making at merchants, whether it’s bill pay, whether it’s person-to-person, or card on file. Once you do that right and you do it seamlessly, you earn the right to the deposits, and then increasingly, the borrowing needs.”

This payments-first strategy clarifies why direct deposit remains a crucial metric, albeit for evolving reasons. While 83% of customers still use direct deposit with their primary checking account, this share has seen a slow decline since 2024. More tellingly, among recently opened checking accounts, half of customers committed to the new relationship by setting up direct deposit, even as they kept their old accounts active, according to Jennifer White, senior director at JD Power. This phenomenon is termed “soft churn.”

Soft churn occurs when customers open new primary accounts but leave existing relationships dormant. JD Power data indicates that 50% of new checking accounts are opened this way, double the rate of “hard churn” where customers actively close previous accounts. For many banks, this means they are quietly losing their primary customer relationship without traditional defection metrics reflecting the change.

Christian Widhalm, CEO of Bloom, a credit data infrastructure platform, has witnessed this dynamic firsthand. Bloom offers a service allowing checking account holders to build credit history from regular bill payments (rent, utilities, cell phone bills). Bloom discovered that customers weren’t just enrolling for credit building; they were actively shifting their financial activity to maximize the benefit.

“We were getting all these people reaching out saying, ‘I love this product, I’m trying to get my credit back up so I can go get a mortgage. But hey, I couldn’t find my electric bill,’” Widhalm recalls. “We end up going back to them and telling them, the reason you can’t find it is that you’re not paying it out of this account. They will then go and change their payment, transfer the money over and then start making those payments out of their Bloom connected account.”

The results were significant: Bloom observed an 11% increase in deposits within three months of enrollment and an 18% surge in recurring monthly payments. This demonstrates how customers consolidate financial activity around institutions that offer tangible value in their daily financial lives.

Converting Efficiency into Stronger Relationships with AI

Winning payments-based primacy demands two capabilities that community financial institutions have historically found challenging: delivering seamless digital experiences and ensuring sufficient staff capacity for meaningful relationship building. Increasingly, AI is proving to be the solution to both.

When Busey Bank acquired a $7 billion institution in 2024, adding 30,000 new customers, it deployed Glia’s voice AI platform to manage routine inquiries. This strategy allowed human advisors to focus on more complex interactions. Glia’s virtual assistants successfully handled 61.5% of calls, and automated post-call work reduced wrap-up time by 50%. Busey effectively absorbed the new customer base without expanding its headcount.

These efficiency gains enabled Busey to reallocate frontline staff to relationship-building roles, promoting two customer care advisors to strategic support positions and planning to upskill more team members for treasury and commercial roles.

“The more interactions we can handle without human support, the more we can repurpose employees for higher impact,” explains Caitlin Drake, senior vice president and director of customer experience and support at Busey.

Dan Michaeli, CEO of Glia, observes a consistent pattern among community institutions leveraging AI. “The differentiation that community and regional banks have to achieve primacy is currently hampered by their cost structure,” Michaeli notes. “AI is a complete unlock. If you have an AI workforce that’s built for banking, you have the opportunity to completely transform how the institution can deepen that advantage of relationship, deepen that connection to the member or customer.”

Designing Products for Modern Primacy

While the checking account alone won’t secure primacy, a multi-product strategy deeply integrated with daily financial behaviors can. Citadel Credit Union exemplified this with the March 2025 launch of Ultimate Growth Checking (UGC).

UGC is a relationship-based account that automatically adjusts rewards based on member engagement. Instead of requiring manual qualification for different tiers, it uses AI to monitor behavior and adjust benefits accordingly. Members who incorporate more products – credit cards, loans, or higher deposit balances – receive boosted rewards across their entire relationship.

In its first year, Citadel opened over 22,000 UGC accounts, accounting for approximately 20% of the credit union’s total deposits, and achieved an impressive Net Promoter Score (NPS) of 91.

This approach acknowledges a fundamental shift in consumer behavior. JD Power data indicates that when customers open new accounts, their primary motivators are better budgeting and organization tools, followed by promotional offers and support for life events. Younger customers, particularly Gen Z, are especially driven by life changes that necessitate new financial infrastructure.

“Gen Z wants advice-based relationships and digital convenience,” says Courtney Rowan, senior vice president and chief digital and transformation officer at Citadel Credit Union. “They’re not going to wait for annual rewards. They need that engagement more frequently.”

The Undeniable Community Advantage

Despite the challenges community banks and credit unions face in competing with fintechs and larger institutions on technology and scale, they possess a unique structural advantage that is increasingly valuable: local trust.

Kaushal argues that community institutions serve customers who highly value local relevance and community connection. “There is going to be a dominant relationship,” she states. “What you want to do is build to be that dominant relationship and build the moat around it.”

This “moat” isn’t merely product features; it’s the powerful blend of digital convenience and genuine human connection that fintechs struggle to replicate. In an era marked by AI-generated content, deepfakes, and digital fraud, authentic human relationships command a premium. Community institutions that can match fintech-level convenience while maintaining a local presence are uniquely positioned to win the moments that matter most: complex lending decisions, life event planning, navigating financial stress, and other trust-dependent transactions.

Today’s playbook for primacy focuses on becoming the dominant relationship for the financial moments that shape people’s lives. This is achieved by strategically leveraging payments, thoughtful product design, and operational efficiency to earn that position every single day.

The genie of financial fragmentation won’t return to the bottle. However, community institutions that grasp where primacy truly resides in 2026 are well-equipped to thrive.

Source: thefinancialbrand.com