Survey – Consumers Don’t Want What Banks Are Offering
It’s hard when a relationship ends, but what can be worse is that period just before it’s over — the time when you realize it isn’t going to work out, but you haven’t gotten around to doing anything about it yet.
Many consumers may be at a similar point with their banks today, according to a new MoneyRates survey.
The Op4G-conducted survey asked 2,000 American adults what factors would be most likely to make them change banks. The results revealed that the issues respondents said are most likely to make them switch are the same ones that seem to be spreading at banks throughout the U.S.
What makes customers leave banks?
Here are the factors that respondents said are most likely to make them leave their current bank, from most to least common:
- A new or raised fee (47.7 percent)
- A bad customer service experience (21.4 percent)
- Closure of a convenient branch (14.5 percent)
- Uncompetitive interest rates (10.6 percent)
- Lack of up-to-date online features (5.9 percent)
Those responses give you an idea of what customers want. A look at what banks are actually offering will give you an idea why so many of these relationships seem at risk of failing.
Why customers and banks may be headed for a split
Nearly half the customers surveyed said that they would react negatively to a new or raised fee, and yet the banking industry has been steadily increasing fees in recent years. According to the most recent MoneyRates Bank Fees Survey, the number of checking accounts with no monthly maintenance fee declined by 5 percent over the past year, to just 30.3 percent of all accounts. Meanwhile, the average monthly maintenance fee and overdraft fee increased. The banking industry seems bent on doing the one thing most likely to irritate customers.
A bad customer service experience was the second most likely trigger for customers leaving their banks in the survey, yet many prominent banks responded to the aftermath of the financial crisis by cutting staff and have continued to do so since. The Wall Street Journal reported in November that JPMorgan is ahead of schedule in its plan to cut 4,000 jobs from its consumer banking division. Staff reductions mean longer waits for service and more automated phone trees — in other words, more bad customer service experiences.
Those two items account for what 69.1 percent of the respondents said would lead them to change banks, but the industry doesn’t stop there when it comes to alienating their customers. Banks are clearly hitting the next two customer hot buttons as well.
Fourteen and a half percent of survey respondents said that the closure of a convenient branch would be most likely to prompt them to change banks, yet banks have been steadily closing branches over the past few years. Earlier this year, the FDIC reported that the total number of bank branches has declined for four consecutive years, with a total loss of more than 3,000 branches over that time.
As for uncompetitive interest rates, which was cited by 10.6 percent of survey respondents as most their most likely reason to change banks, the most recent MoneyRates America’s Best Rates survey found that the average interest on savings accounts was just 0.185 percent, even though there were several options paying more than four times that rate. When the average is so far below the top rates, it means most customers are not getting competitive interest rates from their savings accounts.
Interestingly, the one thing banks are doing for their customers these days is investing in online capabilities, thereby addressing something that only 5.9 percent of survey respondents cited as a potential problem that would make them change banks. This is a little like the wife who wants candlelit dinners and the husband who buys her a new dishwasher instead.
Why are banks seemingly so out of touch with what their customers want? Customer inertia may have something to do with it. Despite their pet peeves about banks, customers are slow to change. The survey found that about half of respondents haven’t changed banks in the last five years, and nearly two-thirds don’t expect to change within the next five years.
Given what customers want and what banks are delivering, many people may be trapped in bad banking relationships. If this describes your situation, remember that there are nearly 7,000 FDIC-insured institutions to choose from today. As tough as breaking up may be, staying trapped in a bad banking relationship is even worse.