Commentary: Promiscuity in banking and the effect of subsidized checking accounts

According to, at least 11 banks in Germany offer customers money for switching their checking account. Essentially, they offer a reward for infidelity, for breaking up a long-lasting relationship, for trading-up into something offering instant gratification. Who are those people most likely to jump ship and what is the expectation that they will become lasting customers at the new bank?


A study of human relationships may offer some insight into this question. For example, it is a well-discussed irony that people who “lured” their partner out of a previous relationship are (or pretent to be) shocked when they are later on left by their partner themselves. But what can you expect from a person who has already proven to be someone who had no problem of ending a prior relationship? Statistics proves this point, too: While “only” 40-50% of all first marriages end in divorce, the percentage for second marriages to end in divorce is significantly higher at 60% (Source: Dr. William H. Doherty, Utah State University)

The annual “divorce rate” for checking accounts is roughly 8-9% (Source: J.D. Power and Associates). I have no data available about a break-down of the numbers for customers who have previously switched banks vs. those who switch for the first time. But I would expect to find that there is a pool of “promiscuous” bank clients who will happily take their banking relationship to wherever short-term benefits are the highest. Having paid such a customers money to become one’s client, it will be very difficult to “monetize” the relationship. As precisely this customer has a proven track-record of switching banks the moment the free lunch is taken away (and replaced by high-fee structures).

So how can this concept ever work?

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Prof. Dr. Fidelio Tata / author BankingHub

Prof. Dr. Fidelio Tata

Professor of Finance International School of Management Berlin

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