Exploring for new deposit products: we search for some of the new products currently being offered by banks around the country. What we found provides clues as to current trends--and tips on effective implementation of your own redesigned products.

• Author: Sullivan, Mary Beth
• Position: Cover story - Survey

FREE CHECKING IS ALREADY DISAPPEARING from the product menus of many financial institutions.

That's one of the conclusions from a rough-and-quick survey we took recently of 40 financial institutions around the country. Another determination: Banks that have not introduced new deposit products in years have now redesigned--or at least started to redesign--their existing products.

What is causing this interest in reconfigured deposit products? One factor is Regulation E, which went into effect Aug. 15, and which requires customers to opt-in to overdraft programs. While the full impact of this change in deposit service-change incomes has yet to be measured, banks are already reacting by fine-tuning their deposit-product suites.

Another factor driving product redesign is the recession, which has changed customer needs, leading to a renewed focus on saving. While many checking accounts continue to provide incentives for spending--such as debit reward features--new checking accounts introduced in recent years tend to offer new types of incentives more in line with consumers' changing mind-sets and behaviors. In addition, with today's high rates of online banking adoption and fast-growing acceptance of mobile banking, consumers new and different account access and delivery options from their primary financial services providers.

With these issues in mind, we undertook a brief and somewhat subjective survey of the retail deposit product (excluding time-deposit) offerings in the market today. Our goal was to determine where banks stand in terms of offering more relevant product features, better account access, and easier online purchase and account comparison capabilities. Using the 2010 Top Performers rankings that we produced recently for ABA Banking Journal, we randomly selected 20 large/regional banks (total assets of $3 billion or more) and 20 community banks (total assets of less than $3 billion) and gathered information via their Web sites to determine how they are addressing emerging best practices in deposit product redesign.

The survey was performed via the Web to imitate the shopping experience of most consumers--63 percent of online U.S. adults who research financial products do so online (according to a 2010 Forrester survey). While our analysis isn't exactly scientific, we think it provides a benchmark of today's deposit product line situation--and we will come back in a year to see how much change takes place as banks and thrifts continue to respond to Regulation E and other regulatory changes.

Survey methodology

Our 2010 Top Performers list of 135 institutions was narrowed to 40 financial services companies for this analysis. We examined both first-quarter financial performance and deposit-product data availability. We also attempted to ensure that selected institutions came from a wide range of geographic regions and represented a variety of sizes. Institutions were excluded if they met one of the following conditions:

* Experienced a material change in financial performance during the first quarter of 2010 (defined as either a negative ROAE or a Texas Ratio of 100 percent or more).

* Were placed under regulatory order during the first quarter of 2010.

* Did not have a Web site or did not make detail on the pricing and features of their deposit products readily available.

* Operated several separately chartered subsidiaries, each with its own slightly different suite of deposit products.

Deposit products (excluding time-deposit products) were assessed across three categories: product...