Earning Primacy: The Evolving Definition of Primary Financial Institutions

For decades, banks and credit unions measured success by a simple metric: net new accounts. A growing customer base, signaled by a surge in new account openings, promised a clear path to increased revenue and long-term profitability. However, the financial landscape has dramatically shifted, challenging this traditional view and forcing institutions to redefine what it truly means to be a customer’s primary financial institution (PFI).

Initially, the rise of neobanks and niche banks seemed to validate the account growth strategy. “Early on in the neobank or niche-bank revolution, you had banks really looking at account growth,” notes Peter Longo, vice president of product at Finastra. “They were just crushing it with net new account growth, but not necessarily profitability.”

Today, a proliferation of promotional offers and the diminishing costs of switching have fundamentally altered consumer behavior. Customers are increasingly diversifying their financial relationships, opening multiple accounts to chase attractive rates and bonuses, often while maintaining their existing “primary” accounts. Data from October 2025 by J.D. Power reveals a striking trend: 52% of new checking accounts, 48% of investment accounts, and 65% of credit cards are additional accounts, not replacements.

Beyond Account Ownership: The Fluidity of Loyalty

Simply holding a bank account no longer guarantees a deep, lasting relationship. Many customers maintain minimal balances or use their so-called primary account merely as a transactional pass-through. Ron Shevlin, chief research officer at Cornerstone Advisors, aptly describes this phenomenon as a “paycheck motel” – an account that’s primary when a direct deposit arrives, but whose funds quickly migrate elsewhere.

The core insights for today’s financial institutions are critical:

• Account growth doesn’t equate to relationship strength: Net new accounts often reflect customers opportunistically pursuing rates and bonuses, not deep loyalty or profitability.
• “Primary” status is increasingly porous: Consumers manage multiple active accounts, using some as mere transit points while the real value and balances reside elsewhere.
• PFI still matters, but its meaning has evolved: True primary status is now signaled by behavioral cues like consistent income flow, active usage, engagement levels, and overall wallet share, rather than just account ownership.
• Profitability follows priority, not exclusivity: Research indicates that primary relationships significantly boost deposits and fee revenue, even as customers distribute their products across various providers.
• Winning primacy means earning “gravitational pull”: Institutions that become a customer’s central financial hub – by offering relevance, consistent utility, and segment-specific value – can maintain primary status without needing to own every aspect of their financial life.

For banks and credit unions, PFI remains a crucial objective, but its definition is now more nuanced. Institutions are challenged to identify which customers genuinely drive revenue and to adapt their strategies as consumers embrace diverse providers for spending, saving, lending, and investing. The focus is shifting from mere account ownership to meaningful engagement, active usage, and the potential for long-term profitability.

“Today, primary status is far less about account ownership and far more about behavior and engagement,” asserts Jennifer Simmons, vice president of growth strategies at ADVANTAGE. “In today’s environment, primary FI status is no longer about exclusivity — it’s about priority.”

The Undeniable Business Case for Primary Relationships

Despite the growing complexity, the underlying assumption behind a PFI-centric strategy holds true: customers who view an institution as their central financial hub tend to be more profitable. This historically centered around a checking account, envisioned as the gateway for spending, saving, borrowing, and future product adoption.

Recent industry research from Curinos underscores this, showing that customers with a primary PFI deliver substantially higher returns on investment. They generate eight times more fee revenue, ten times higher average deposits, and a more robust operating-to-reserve deposit mix compared to non-primary customers. The strategic bet for banks prioritizing PFI is that these primary account holders will demonstrate greater loyalty and deepen their relationships by adopting more products and services throughout their life stages.

“I think it’s [a] very valid metric,” comments Neil McHugh, managing director of deposit strategy and programs at Univest Bank and Trust, acknowledging that it has “become increasingly layered and or complex based on a number of things … including market dynamics and consumer behavior.”

“Primary” as a Fluid, Not Fixed, Concept

Modern consumer behaviors are directly challenging the traditional PFI construct. Ron Shevlin of Cornerstone Advisors contends that for a significant portion of the market, particularly those under 45, the concept of a single primary financial institution has largely eroded. Younger generations, he argues, tend to spread their loyalty across multiple brands, selecting financial products that best suit specific needs rather than committing to one all-encompassing 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 survey by Cornerstone Advisors involving 2,500 U.S. adults highlighted this generational divide: only 35% of Gen Z consumers linked “primary” status to direct deposit, a stark contrast to 61% of baby boomers. This suggests that traditional markers like direct deposit no longer guarantee loyalty or profitability. Many consumers use one account for income routing but then disperse funds for saving, investing, or borrowing elsewhere. While a checking account may anchor daily transactions, significant balances, assets, and long-term value often reside with other providers.

Other industry experts echo this skepticism. Neil McHugh observes that conventional indicators like a “main checking account” or direct deposit no longer reliably correlate with where customers hold their money or generate value. The result isn’t the disappearance of primacy, but its transformation into a far more fluid and context-dependent status.

Neil Stanley, CEO of The CorePoint, warns that even holding a customer’s primary checking account doesn’t guarantee their wallet share. The simplistic view of a bank being “primary” or not overlooks how customers actively use multiple providers for their distinct financial needs. “Customers don’t close accounts anymore,” Stanley notes. “They just move the money,” leaving institutions with transaction volume but often limited balances.

From Ownership to Priority: Redefining PFI

Despite these shifts, practitioners working directly with community banks assert that dismissing PFI entirely would be a mistake. Jennifer Simmons of ADVANTAGE emphasizes that while the concept is evolving, it hasn’t vanished.

“Primary status today is far less about exclusivity and far more about priority,” Simmons reiterates. “It’s about where income flows, where spending happens, and which institution customers turn to first when a financial need arises.”

Instead of merely counting products, banks are increasingly defining PFI through indicators of behavioral dominance: the percentage of income inflows received, debit card usage frequency, digital engagement levels, and the consistent return of balances after funds move out. These behavioral signals offer a more accurate representation of relationship strength than simply tallying account ownership.

Customers may indeed maintain multiple financial relationships, yet still organize their financial lives around a single “home base.” In this modern context, PFI isn’t about owning every product, but about earning a powerful gravitational pull.

Boston Consulting Group (BCG) defines primary bank relationships as those where the financial institution captures roughly 60% to 80% of a customer’s money flows. This is reflected in metrics such as 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%).

Building Wallet Share and Engagement for Smaller Institutions

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 these institutions to instead focus on clearly defined customer segments where they can deliver exceptional value. This could involve serving a specific geographic area, supporting individuals in particular professions, or addressing the unique day-to-day money management needs of a niche group.

“At some point you’ve got to pick a lane,” states Nikhil Lele, EY Americas consulting banking and capital markets leader. “There are multiple pathways to reach primacy. It’s not one singular approach.” This strategic choice could mean focusing on relationship-driven banking, becoming the preferred hub for payments and money movement, or competing on trust and deep engagement as the ultimate financial home base.

Shevlin suggests that affinity-driven growth offers a practical competitive edge for community banks and credit unions. This includes developing products tailored for gig workers with irregular cash flows, checking accounts integrated with credit score reporting and other financial health tools, investment capabilities embedded directly into checking, or specialized offerings for specific professions.

For instance, in 2024, Arizona-based Vantage West Credit Union launched HUSTL, a digital-only sub-brand specifically for freelancers. Rob Hoyle, chief people and technology officer at Vantage West Credit Union, explains that HUSTL was designed to meet the unique needs of independent workers with unpredictable cash flows. “We created some tools, or at least packaged some tools together, that would meet their specific needs … like cash flow management or invoicing and accounts receivable, building that in so you don’t need Quicken or QuickBooks,” he said.

The credit union also innovated with a 40-year fixed-rate mortgage product, aimed at easing homeownership for first-time buyers by lowering monthly payments. Hoyle stresses that effective outreach to affinity customers must be meticulously paired with data-driven insights, warning that even large institutions falter when marketing efforts are disconnected from actual customer behavior.

Ultimately, modern primacy is earned through consistent, repeated positive interactions, not through product ownership. As Simmons concludes, “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