Jim S Miller

Thoughts on the Client Experience and Banking

More Big Bank Customers Switching Banks Due to Fees and Poor Service

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In 2012, 9.6 percent of customers indicate that they switched their primary banking relationship during the past year. This is an increase from 8.7 percent in 2011 and 7.7 percent in 2010. According to the J.D. Power and Associates study, which examines the bank shopping and selection process, in 2012, fees are the main reason customers shop for a new primary bank. One-third of customers at big and large regional banks cite fees as their main shopping trigger.

Although fees may result in customers switching banks, the underlying reason often begins with poor customer service. “It is apparent that new or increased fees are the proverbial straws that break the camel’s back,” said Michael Beird, director of the banking services practice at J.D. Power and Associates. “Service experiences that fall below customer expectations are a powerful influencer that primes customers for switching once a subsequent event gives them a final reason to defect. Regardless of bank size, more than one-half of all customers who said fees were the main reason to shop for another bank also indicated that their prior bank provided poor service.”

 

Other findings from the J.D. Power Study:

  • Acquisition of new customers by smaller banks and credit unions has increased by 2.2 percentage points to an average of 10.3 percent in 2012 from 8.1 percent in 2011.
  • Between 10.0 and 11.3 percent of customers at big banks, regional banks and midsize banks  switched banks within the last 12 months, compared to only 0.9 percent of customers at small banks and credit unions (significantly down from 8.8 percent in 2011).
  • Several of the more successful banks achieve a higher acquisition rate through the use of promotions and cash incentives, but only 32 percent of customers who select a new bank because of a promotional offer said they definitely would not switch banks in the next 12 months, compared to 46 to 51 percent of customers who chose a bank because of either a good service experience or positive recommendation.
  • About half of customers who left a big bank, moved their relationship to another big bank.

 

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Written by Jim S Miller

February 27, 2012 at 6:54 pm

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