5 Factors That Make or Break Bank Loyalty


NEW YORK (MainStreet) — If you’re one of the countless consumers who’s dissatisfied with their bank, knowing what other consumers value in their financial institutions might help you when shopping for a new institution yourself.

Banks would do well to take a long, hard look at a new survey that listed these factors, as bank deposit assets are measured in trillions these days, and from 2000 through 2008, grew from  around $44 trillion to $7 trillion, an average of $30,000 per U.S. household.

The report also notes that more customers are looking to switch financial institutions, as 8.7% of survey participants say they switched banks in the past year, up 1% from the previous year.

These customers aren’t just switching to switch, either—they’re tough and highly selective.

"These customers appear to be more discriminating and diligent when selecting a new bank,” says Rockwell Clancy, vice president of financial services practice at J.D. Power and Associates, which sponsored and ran the study. Clancy says most people change banks due to changes in their lives, but many people shed old banks because of fees, rates, unmet expectations and lousy customer service.

When consumers choose new banks, what’s at the top of the list, criteria-wise? J.D Power found that it boils down to advertising, branch convenience, products and services, promotional offers, and direct and indirect customer experience (including past personal interactions, recommendations and bank reputation).

Advertising is somewhat surprising to see on this list, and is likely disappointing to smaller banks, which have low ad budgets, especially for television. Big banks have a clear advantage here, especially in large urban and suburban markets, and as J.D. Power says, “banks that perform well in acquiring new customers—Chase, PNC Bank and SunTrust Bank, in particular—tend to be aggressive in their advertising and promotions.”

Branch convenience is another mini-shocker. With the advent of mobile and online banking (150 million users will have made a mobile banking transaction by the end of this year), actually walking into a bank branch has become something of a relic, particularly to young people. But J.D Power says it still matters.

Products and services and promotional offers are right on the money. Essentially, bank shoppers are asking banks, “How will you help with my money?” The answer usually comes from bank products and deals.

The last issue – customer experience – may be the biggest factor of all. Consumers value how they’re treated by businesses, especially those handling their money. Customer service is such a big issue that one bad experience can negatively color a banks’ standing in a consumer’s mind for years. Conversely, a pleasant experience can help keep a customer in the fold for the long haul.

Still, customers can be fickle, and banks need to know that. "Customers who choose to stay with their current primary bank for additional products are most driven by positive past experience and perceptions that their bank is more focused on customers than on profits," adds Clancy.  "Clearly, banks that are not providing a noticeably better experience are more likely to lose the business of indifferent customers, who are more easily lured by the next attractive promotional offer to come along."

Banks and bank customers need each other, but customers want to feel valued. It’s a dance that financial institutions need to learn, and with those issues listed above, it’s one they’ll need to master.

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.

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