Banks and credit unions have a quiet problem. The checking account is still open and the customer or member is still on the books. From a distance, the relationship can look healthy. Up close, it may tell a different story.
The paycheck may be landing somewhere else. The debit card in the customer or member’s wallet may not be yours. Savings may have moved to a higher-yield account. Bill pay may be happening through another institution, another app, or whatever experience made the next step easier. The customer or member did not necessarily leave at one obvious moment. They simply started moving their activity and balances somewhere else.
That behavior is soft switching.
Soft switching happens when customers or members keep an account open while quietly moving the behaviors that define a primary relationship to another provider. The account remains - the primacy does not. Industry research supports what many institutions are already seeing: customers and members are increasingly multi-banked, and a meaningful share are shifting money and activity without formally closing the old relationship.
For context, a recent J.D. Power study, “Customer and Members are Opening New Accounts and Quietly Making Them Their Primary Relationships,” published October 20, 2025, found that 52% of all new checking accounts opened in the United States were additive, while 25% were replacement accounts. The study also found that 54% of these additional or replacement accounts became the accountholder’s primary account.
For years, many institutions treated account opening as the win. Open the checking account, land direct deposit, add a card, and the relationship was assumed to be secure. That made sense when financial lives were less fragmented and switching required more effort. That world has changed. Loyalty is thinner, digital experiences are better, and convenience, not only branch convenience, now has a lot more influence over customer and member behavior.
Consumers now bank in pieces. One institution may get the paycheck. Another may hold emergency savings. A third may get credit card spending. A fintech app may handle investing. A digital wallet may sit between the customer and member and the merchant. The result is a financial life that is more fragmented, more fluid, and much easier to reallocate than many legacy growth plans assume.
Primary financial status matters because the most valuable relationships are not defined by whether an account exists, they are defined by what activities are used within their checking account by customers or members. Where does income land? Where are bills paid? Which card gets used? Which app gets opened first? Who do the customer and member trust when there is fraud, confusion, or a life event big enough to change the household balance sheet? Those behaviors determine primacy. The account number is only part of the story.
Traditional churn is easy to spot. The customer or member closes the account, the loss is recorded, and the dashboard shows the problem. At least that kind of attrition announces itself.
Soft switching is more dangerous because it hides in plain sight. The customer or member stays, technically. But the signals have started to change. Average balances decline. Card usage slows. Bill pay activity fades. The app gets opened less often. Cross-sell response weakens. The relationship still exists administratively, but the economic value is moving somewhere else.
Many financial institutions still focus retention efforts on end-stage indicators: the loss of direct deposit, closed accounts, or the loss of lending relationships. Those are important, but they often show up late. Institutions should also be watching leading indicators of soft switching, including declines in direct deposit activity, bill pay usage, debit card transaction volume, and inactive credit / debit cards.
That is why soft switching is so costly. It weakens household profitability long before leadership agrees there is a retention problem. It also helps explain why an institution can show healthy account totals while engagement, growth, and wallet share are moving in the wrong direction. The accounts are still there. The behaviors are not.
Direct deposit remains one of the clearest indicators of relationship depth. It still matters greatly. Research from MX, “Top Bank Drives Lift in Direct Deposit Switching,” suggests accounts with direct deposit tend to carry higher balances and stay open longer. When income lands, more of the relationship tends to follow.
But even direct deposit is no longer a complete definition of primacy. A customer or member can send payroll to one institution and still move meaningful financial activity elsewhere. They can keep a checking account for utility, build savings outside the institution, changing card spend to a richer rewards program, and let another app become the interface they pay attention to most.
Primary Financial Institution is better understood as a pattern of behavior rather than a static designation earned at account opening and protected forever by habit.
Opening an account creates access. Primacy is earned through repeated usefulness.
Soft Switching does not mean relationship banking is not relevant today. Soft switching is causing relationship banking to prove itself in a market where customers or members have more options, more transparency, and less patience for generic outreach dressed up as personalization. Relationship banking is still critical as it builds trust, guidance, and human understanding.
Banks and credit unions still have an important advantage: trust. ABA survey data from the Fall 2025 Morning Consult survey on consumer trust and fraud protection shows consumers are far more likely to trust banks and / or credit unions than fintech payment providers to protect them from fraud. That matters. In a market full of easy interfaces and unclear liability, trust still has real value.
But trust alone is not enough to secure a primary relationship. Customers and members do not reward institutions for being trustworthy in theory. They reward institutions that are useful in practice: easy to use, clear to understand, timely in their outreach, relevant in their guidance, and competent when something goes wrong. Safety is table stakes. Usefulness is the deciding factor.
Changing how a “primary” definition is made is a strategic shift many institutions still need to fully absorb. The battle is not just to open accounts. It is to build habits. It is for the recurring behavior that makes the relationship economically real.
Institutions that win primacy tend to do four things well:
Your relationship-banking framework still works as you stay in touch with your customers or members, know them, show them you know them, and help them. Being the primary financial institution is earned by consistently proving that you understand the customer or member and can make their financial life better. That is what relationship banking looks like now that the old assumptions no longer hold.
Customers and members expect the relationship knowledge to move with them from the branch to the browser to the phone. The challenge is delivering that experience at scale. The relationship cannot be limited to only one channel anymore, because the customer and member does not limit themselves to one channel either.
The institutions that thrive will be the ones that combine the old strengths of relationship banking with the modern capabilities required to deliver it consistently:
The winners will not be the institutions that admire relationships in principle. They will be the ones that earn the relationships before someone else captures the customer and member’s behavior.
The old model said account opening marked the start of a lasting relationship. Today, customers and members decide who their primary institution is every day. They decide where the paycheck lands. Where bills get paid. When a card is used. When a fraud alert appears. When a life event creates a new need. When another app offers a simpler answer in fewer clicks.
Consumers’ decision of primacy is not made once; it is made repeatedly. So, the real question for banks and credit unions is no longer, “Did we open the account?” It is, “Are we still earning the relationship?” Because in modern banking, the account opening is not the relationship. It is the introduction.