Switching Banks on the Rise

http://younginsurance.wpengine.comConsumer backlash against bank fees, coupled with poor service and unmet customer expectations, has fueled increases in defection rates among customers of large, regional and midsize banks, according to a new study from J.D. Power and Associates.
As an increasing number of consumers switch from larger banks, smaller banks and credit unions continue to benefit, according to the 2012 U.S. Bank Customer Switching and Acquisition Study (SM).

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. Among big banks, regional banks and midsize banks, switching rates average between 10.0 and 11.3 percent, while the defection rate for small banks and credit unions averages only 0.9 percent, a significant drop from 8.8 percent in 2011.

The study, which examines the bank shopping and selection process, finds that 9.6 percent of customers in 2012 indicate they switched their primary banking institution during the past year to a new provider. This is up from 8.7 percent in 2011 and 7.7 percent in 2010.

The study finds that fees are the main reason customers shop for a new primary bank. In particular, one-third of customers of big and large regional banks cite fees as the main shopping trigger. When banks announce new fees, customers weigh the price they pay against the value of their experience. According to the study, a poor service experience followed by a fee increase is often the trigger that causes bank customers to look elsewhere. 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.

J.D. Power and Associates offers the following tips for customers looking to switch banks:

  • Shop around to compare terms and service before deciding on a bank. Don’t forget about direct online banks, as their competitive fees and rates may offset any inconvenience due to lack of physical branches.
  • Don’t be swayed by promotion gifts/cash alone. It is more important to ensure the bank that you are selecting offers the right products to meet your needs and that the fees associated with the products are in line with what you are willing to pay.
  • Read account brochures and disclosures carefully and don’t be afraid to ask questions about the products you are about to open.

Source: J.D. Power and Associates

© Copyright 2020 Young Insurance Agency Blog | Powered by Stratosphere Marketing Solutions

The notice is from Mercury Insurance Click Here