Retail customers are switching banks and shopping competitors in greater numbers these days but, according to a survey by J.D. Power and Associates, their reasons for jumping ship have little if anything to do with interest rates or service fees.
In its 2011 U.S. Retail Bank New Account StudySM released today, J.D. Power and Associates reports that 8.7% of all retail banking customers switched institutions last year -- up from 7.7% in the 2010 report. As a group, these customers said they considered an average of 1.9 different banks for their various accounts and investments, up from 1.6 banks last year.
Turns out that the outcry over maintenance fees, ATM fees and jacked up credit card interest rates meant very little at the end of the day as most of the 4,700-plus customers surveyed said a "change in life circumstances" -- which would seem to cover everything from relocating to another part of the country to filing for bankruptcy protection -- was the No. 1 reason they jumped ship last year.
While most of the respondents said poor service and "unmet expectations" were two other huge factors influencing their decision to bolt or at least shop the competition, it was advertising and giveaways -- particularly campaigns using investment gift cards and the like as a lure -- that were most effective at getting people to close out their counts and move on to greener pastures.
"The increased switching rate indicates more consumers are coming into the market, providing more opportunities for banks to acquire new customers," Rockwell Clancy, vice president of J.D. Power and Associates' financial services practice, said in the report. "These customers appear to be more discriminating and diligent when selecting a new bank."
Following advertising, respondents in descending order cited branch convenience, products and services, promotional offers and direct and indirect customer experience -- word of mouth -- as the primary reasons they moved on.
The survey found that Chase, PNC Bank and SunTrust Bank were particularly successful at reeling in new customers, mainly as a result of their aggressive advertising and giveaway promotions in the past year.
It's also worth noting that only 43% of the customers who bought an additional banking product last year did it at their primary bank, a clear sign to banks, independent financial advisors and broker-dealers that most consumers are more than willing to spread their investable assets around if given the proper incentive.
"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," Clancy said. "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."
J.D. Power and Associates conducted the survey between November and December, collecting multiple evaluations from customers who switched to or considered switching from more than a dozen full-service banks including the likes of Bank of America, Chase, Citibank, Wells Fargo and HSBC.