With the current state of the economy, these are interesting times for financial services firms. Many are finding that general skittishness about the economy, combined with concerns about the banking sector, are leading to unanticipated customer behavior changes. Financial brands are beginning to pay attention. According to a recent survey conducted by Ernst and Young, the percentage of people globally planning to change banks this year has increased from 7 to 12%.
The first issue at stake is a simple return on investment. Customers are sensitive to increases in banking rates and poor rates on savings accounts, CDs and other growth and investment accounts. Consumers are looking for banks offering the lowest transaction fees, in connection with the highest returns. Thanks to the instant availability of information on the internet, it’s easy to find alternatives to current banking service providers.
Consumers are concerned with more than just a great deal; they also want to have flexibility in the way that they relate to their banks. Customers are looking for the ease of conducting simple transactions online, via mobile banking, tablets, or their home computers. They also expect to have a branch available to speak with specialists or management about individual questions, complex transactions or customer service concerns.
34% of consumers around the world have changed banks. In the United States and Canada, a dramatic increase can be seen in the number of customers that switched providers in the last year. In 2011, that percentage was 38% and that has increased to 45% in 2012. See the chart above for insight into the specific reasons these consumers changed banks.
At the root of the change seems to be a general mindset issue. Overall satisfaction with banks remains high, but overall levels of trust remain low. Consumers feel that they must watch out for their own best interests. As a result, many consumers are diversifying their financial relationships and are now banking at more than one institution.
Ernst and Young has clear recommendations for banks:
- Focus on developing digital channels that allow customers easy, round the clock access to conduct transactions
- Be transparent about all fees, costs, and customer service promises
- Offer different levels of customer service (and charge accordingly) to meet a variety of customer needs
As a financial institution, this is an interesting time. When you’re wrestling with customer service issues to improve customer retention or working to determine the best way to prepare to capture new customers seeking friendlier banking conditions, it’s an ideal time to conduct market research to understand what your customers really need.< Back to Previous