Why do people switch banks?

Transcription

1 mer ervice Why do people switch banks? A Bank Clarity Report Free checking Local

2 See banking more clearly. What is Bank Clarity? Bank Clarity is a division of the Sells Agency that provides our unique Marketing Clarity service to the banking industry. We surveyed banking consumers and learned some valuable insights worth noting: Why consumers switch banks Why consumers choose to do business with their primary bank What consumers say sets their primary bank apart from other banks If consumers have a bank in mind they would most likely switch to For those with a preference, why they would choose to switch to that particular bank For those without a preference, what would attract them to choose a particular bank How likely consumers are to switch banks in the next six months Methodology: In order to gain a more accurate understanding of today s bank consumer, we conducted one-on-one interviews with 200 banking consumers from June 12 to July 10, 2012.

3 Why do consumers choose to do business with their primary bank? It appears that the majority of people choose their bank not based on the services offered, but rather their personal relationships and the convenience of locations. The top three reasons consumers choose to do business with their primary bank are family or friends use that bank (31.5%), convenient locations (25%), and knowing an employee at that bank (6.5%). 31.5% Family or friends use that bank 63% Convenience & Relationships 25% Convenient locations 37% Other Responses 6.5% Knowing an employee at that bank 5.5% 3.5% 3.5% 3% Local Good reputation Job related Fees aren t excessive *21.5% Other

4 What do consumers say sets their primary bank apart from other banks? These results are somewhat surprising. Even with the rise of different banking technologies, service still matters most to bank consumers. The Top 64% of Respondents 30% 24.5% 9.5% Service quality Convenient locations Nothing As shown in the graph, 30% of survey participants said that service quality is what sets their primary bank apart from other banks, followed by convenient locations (24.5%), nothing (9.5%), and online banking (7.5%). The 9.5% that said nothing sets their bank apart from other banks is indicative of how some consumers feel about the current banking industry. If nothing sets their bank apart, then what is going to keep them there? Other Responses 7.5% Online Banking 6.5% 4.5% 3.5% 3.0% More available products Fees aren t excessive Free checking Local *14.5% Other

5 Why do consumers switch banks? With consumers most often changing banks due to changes in life circumstances, preferred brands have an advantage when it comes to gaining new business. 61% are out of a bank s control 41% 14% 6% Moved Marital status Job status A majority of survey participants said that they have switched banks at some point in their lives. When asked, When you left your previous bank, was it because you were dissatisfied, or was there another reason?, only 20% said they switched due to dissatisfaction. Three of the top reasons why consumers switched banks were because: they moved (41%), there was a change in their marital status (14%), or there was a change in their job status (6%). These reasons can be classified as life circumstances. Life circumstances are out of a bank s control and occur constantly. This is one reason why being a preferred brand is important. Other Responses 6.8% 5.9% 5.1% 3.4% Inconvenient locations Knows employee Bank purchased More products offered *17.8% Other

6 Do consumers know where they will go next? Of those surveyed, 57.5% said if they had to change banks today, they have a bank in mind they would most likely switch to. This means that more than half of those surveyed show a brand preference beyond their current primary institution. 57.5% Yes 42.5% No

7 Why is another bank preferred? The Top 65% of Responses 27% Already have a relationship For consumers who have a pre-decision of who their next bank will be, we had one question: why that bank? For 27% of consumers, they already have a secondary relationship with a bank, which they would switch their primary account to if they had to. Other top reasons are: convenient locations (15.7%); seen, heard, or read good things (12.2%); and family or friends use that bank (10.4%). Two of these responses family or friends use that bank, and convenient locations are consistent with the top reasons people chose to do business with their primary bank. For those with a preferred next bank, their top four answers are associated with familiarity. Their familiarity is due to either a pre-existing relationship with the bank, frequently seeing the bank s nearby locations, their family or friends satisfaction using that bank, or the relaying of positive information about that bank through different media and advertisements. 15.7% 12.2% 10.4% Convenient locations Heard good things Family or friends use that bank Other Responses 6.1% 3.4% 2.6% 2.6% More available products Nationwide presence Local Interest rates *20.1% Other

8 You may think that national banks would be the most preferred, but who do people really choose? 25.9% Fees aren t excessive 20% Convenient locations Even though a quarter of survey participants chose their primary bank based on its convenient locations, interestingly, national banks came in last among the traditional bank types. Of the 57.5% of people who know where they would switch, regional banks were the most popular with 29.6%, almost doubling national banks. 29.6% Regional bank 16.5% National bank 20% Local bank 15.6% Credit union 18.3% Superregional 15.3% Free checking 10.6% Interest rates For those without a preference, what would influence their bank choice? Of the people surveyed who did not have a preferred bank in mind, our research shows that the following factors would be most influential in their decision: fees aren t excessive (25.9%), convenient locations (20%), free checking (15.3%), and interest rates (10.6%). In contrast with the answers of those who know where they would switch, these answers are primarily influenced by services and products offered by banks. *28.2% Other

9 How likely are consumers to switch banks? The majority of those surveyed (78.5%) said they are very unlikely to switch banks in the next six months. Ten-and-a-half percent (10.5%) said they are somewhat unlikely to switch banks in the next six months, followed by very likely and somewhat likely (5.5% each). 78.5% 10.5% 5.5% 5.5% Very unlikely Somewhat unlikely Somewhat likely Very likely Those surveyed who have a bank in mind they would most likely switch to are substantially more likely to change banks in the next six months than those who don t know where they would switch. Among those who know where they would switch, 9.6% are very likely and 7.8% are somewhat likely to switch banks in the next six months. This is a drastic difference from those who don t know where they would switch, which are 0% very likely and 2.4% somewhat likely to switch banks in the next six months. However, just because most of those surveyed said they are not likely to switch banks in the next six months, that doesn t mean they won t. As stated before, 61% of people who left their previous bank for a reason other than dissatisfaction they left because of a disruptive event in their life circumstances. Life circumstances, such as a move or job change, are often unpredictable and can cause consumers to switch banks whether it be a divorce, marriage, or moving to a new job.

10 So what does it mean to me? Your brand strength as measured by brand preference is the single most important factor in your bank s ability to grow market share. Because most consumers change banks due to disruptive life events as opposed to dissatisfaction with their current bank and because most consumers already have a preference for the bank they would switch to in such an event, knowing how preferred your brand is paramount. Do you know how preferred your bank s brand is? Do you know which banks in your markets are the most preferred? Are you tracking brand preference on a regular basis? Are you working consistently to improve brand awareness and preference? Other valuable insights: Many people make their decision of where to bank based on their personal relationships and convenient locations, rather than the services a bank offers. Consumers still value service the most, as evidenced by the 30% of survey participants who cited service quality as what sets their primary bank apart from other banks. Survey participants who know what bank they would switch to indicated that they are much more likely to change banks in the next six months than those who did not know what bank they would switch to. Although convenient locations were important among those surveyed, regional banks (29.6%) proved to be more preferred than national banks (16.5%).

11 About Us The Sells Agency is a full-service marketing firm with offices in Little Rock and Fayetteville. The agency serves clients in Arkansas, Missouri, Kansas, Texas, Florida and New York with advertising, public relations and digital campaigns and programs. Since 1995, the firm has worked with more than 25 banks in eight states, ranging in size from $150 million to $12.5 billion in assets. We look forward to introducing you and your bank to Marketing Clarity. Please feel free to call, write or Mike Sells to learn more. 401 W. Capitol Ave, Suite 400 Little Rock, AR West Meadow, Suite 100 Fayetteville, AR Whatever your marketing needs, chances are, we can do it. We have a wide range of experience, from branding and direct marketing to digital and public relations. And we decide exactly how best to help you by using our detailed Bank Clarity process. It s the backbone of how we help banks grow market share and gain new customers. Let us show you how it can work for you. (501) [email protected] (479)

12 Good reputation