The Battle for NOWs

Competition among depository institutions has intensified since January 1, 1981, when commercial banks, savings and loan associations, and mutual savings banks were authorized to offer negotiable order of withdrawal (NOW) accounts nationwide. Depository institutions can now compete for interest-bearing transaction accounts of households and nonprofit orqanizations. The banking industry as a whole conceivably will lose some of its share of the third-party payments (or transaction account) market. Through aggressive marketing efforts and pricing schemes, banks can lessen the competitive impact of NOW accounts; indeed, some banks even may gain an additional share of the transaction account market.