Despite naming its product Virtual Wallet, PNC Financial Services Group Inc. has decided that its Web-centric bank account should be firmly grounded in the real world.
A new account option announced this week, paired with a new policy set to take effect in September, indicates that PNC is more interested in attracting customers from within its branch map than from the farthest reaches of the Internet.
In Virtual Wallet's current form, its accounts can be opened online, and PNC encourages electronic payments instead of paper checks. If a minimum balance is met, PNC reimburses non-PNC automated teller machine fees, a move that further distances the relationship from the branch.
This month, however, PNC said customers of its Performance checking account will be able to use Virtual Wallet's personal financial management interface — but only if they sign up by speaking to a branch or call center representative, not online.
And while Performance customers are still eligible to get some ATM fees reimbursed, that option will be eliminated in September for current Virtual Wallet users.
"My bet is that [PNC] is seeing higher attrition rates among Virtual Wallet account holders outside their branch footprint," said Ron Shevlin, a senior analyst at Aite Group LLC. "By reimbursing for 'foreign' ATM fees, PNC is hurting the profitability of accounts that are less likely to grow into more profitable accounts."
Mike Ley, vice president in the e-business and payments group for PNC, said the goal of the changes is to attract more customers who would think of PNC as their primary bank.
The separate enrollment process should not be a burden to new customers, he said, since 80% of Virtual Wallet customers began their relationship in a branch.
"We found when we listened to customers, they wanted to go [to a branch] and meet somebody and open an account," Ley said. After enrollment, "a vast majority of all interactions happened online."
Virtual Wallet is based around three accounts: Spend, Reserve and Growth. The first is a checking account, the second a short-term savings account for overdraft protection, and the third a long-term savings account. Customers can move money among these accounts by adjusting an on-screen slider, called the Money Bar, and can set savings goals within their view of the Growth account.
The Spend account is a free checking account with no minimum balance requirement. Consumers are entitled to write three paper checks per month without incurring a fee. After that, the bank charges 50 cents per check.
Performance checking account holders are required to keep $1,500 in combined balances (PNC announced Tuesday that it was lowering the minimum to that amount from $2,500). If these account holders activate Virtual Wallet, they will retain their ability to write unlimited checks without incurring a fee.
Virtual Wallet debuted in 2008, originally targeting Generation Y (which PNC defines as ages 18 to 34).
Adding Virtual Wallet to its Performance account would make the tools more useful to older customers; about 20% of Virtual Wallet account holders now are older than Gen Y, the bank said.
"The things we have for Virtual Wallet, including transparency, organization, calendaring and the Money Bar resonate not only with Gen Y, but an older demographic, up to age 45," Ley said. "We continue to add to Virtual Wallet, and we will hopefully make people better money managers."
Stessa Cohen, research director of banking industry advisory services at Gartner Inc., said the new age demographic PNC is targeting may not necessarily be online banking customers.
"They may want to have a face-to-face interaction," Cohen said.
Nicole Sturgill, a research director at TowerGroup in Needham, Mass., said PNC's recent changes are "a logical next step" for the account. PNC "probably got a lot of interest outside of Gen Y."
Sturgill added that over time PNC has been making changes to Virtual Wallet that foreshadowed its move to pursue an older and more profitable audience.
In July, PNC updated Virtual Wallet to add transaction information for the bank's credit cards. Also last year, PNC enabled a joint calender view so that joint account holders could simultaneously see all their scheduled bill payments in one view.
"The credit card gives them a larger product set to offer to a larger demographic," Sturgill said.
Ley agreed. As customers' financial lives "get more complex, we will allow them to do more" with the Virtual Wallet, he said.
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