Chase has introduced a low-cost account (JPM)

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JPMorgan Chase began offering a low-cost account, called Secure, that offers access to Chase ATMs, the Chase Mobile App, and branches for a monthly fee of $4.95 and no minimum balance requirement, according to Reuters.

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The account comes with a debit card, free check cashing, and allows for digital payments, but does not allow overdrafts. For context, the average overdraft fee in 2018 was $35. Since 2012, Chase has offered a prepaid debit card, Liquid. However, many felt that it fell short, as it couldn’t be used for certain purchases, like Uber charges and car rentals.

Secure could effectively cater to a large portion of the population that’s financially underserved.

Thasunda Duckett, chief executive of Chase Consumer Banking, said she hopes the account will attract more low-income individuals and people who have never had bank accounts. Twenty-five percent of the US population is un- or underbanked, with 30% citing bank account fees being too high as the reason, according to the FDIC. That indicates there’s a gap in products being offered to this segment, opening an opportunity for banks to improve their offerings by providing services that address the reasons these underserved consumers don’t have bank accounts; one such way is by offering low-fee accounts. If successful, developing offerings that are accessible to this segment can give legacy firms an advantage over alternative, digital-first services that are flooding the space.
The services that are available to this segment of the population are largely unaffordable, which could make Chase’s offering popular.Duckett pointed out that the annual cost of $60 for the new account compares with $200 to $500 a year at check cashing and money order services. And because Chase is one of the biggest banks in the US — with over 5,000 branches, and 16,000 ATMs — this account can be accessible to a large group of consumers and effectively promote financial inclusion. That’s particularly true as the firm’s network grows: Chase plans to open 90 new branches in new cities this year, and 400 new branches total over the next four years. However, some consumers might consider the $4.95 monthly fee to still be out of reach, which makes it important for Chase to evaluate what kind of fee structure will enable it to reach the most consumers with this account.

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Source: Business Insider – feedback@businessinsider.com (Rachel Green)