Fees aren’t
excessive
Local
Cus
tom
er
Serv
ice
Why do people
switch banks?
A Bank Clarity Report
Free
checking
Free
checkin
g
Free
checking
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.
Bank Clarity is a division
of the Sells Agency that
provides our unique
Marketing Clarity service
to the banking industry.
What is Bank Clarity?
Why do consumers
choose to do business
with their primary bank?
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%).
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.
Local
Fees aren’t
excessive
Convenient
locations
Good
reputation
Knowing an
employee at
that bank
Job
related
31.5%
5.5%
3%
*21.5% Other25%
3.5%
63%
Convenience & Relationships
Other Responses
37%
6.5%
3.5%
Family or
friends use
that bank
*14.5% Other
What do consumers say
sets their primary bank
apart from other banks?
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?
These results are somewhat
surprising. Even with the rise of
different banking technologies,
service still matters most to bank
consumers.
Service quality
More av
ail
able
prod
uct
s
Free ch
eck
ing
Convenient locations
Fees
aren
’t e
xces
sive
Onlin
e B
an
kin
g
Loc
al
Nothing
The Top 64% of RespondenTs
Other respOnses
30%
6.5%
3.5%
3.0%
24.5%
4.5%
7.5%
9.5%
Why do consumers
switch banks?
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.
With consumers most often
changing banks due to changes in
life circumstances, preferred brands
have an advantage when it comes
to gaining new business.
Moved
Marital status
Job status
Inconvenient locations
Knows employee
Bank purchased
More products offered
Other respOnses
61% are out of a bank’s control
41%
6.8%
5.9%
5.1%
3.4%
14%
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.
Yes
No
The Top 65% of Responses
Heard good things
12.2%
Why is another bank
preferred?
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.
Nationwide presence
More available products
Local
Interest rates
Other respOnses
6.1%
3.4%
2.6%
2.6%
27%
Convenient locations
15.7%
Family or friends use that bank
10.4%
Interest rates
10.6%
Credit
union
15.6%
National
bank
You may think that national banks
would be the most preferred, but who
do people really choose?
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.
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.
Super-regional
Fees aren’t
excessive
Convenient
locations
Local
bank
16.5%
18.3%
25.9%
20%
20%
Regional
bank
29.6%
Free
checking
15.3%
*28.2% OtherHow 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).
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.
Very unlikely
Very likely
Somewhat unlikely
Somewhat likely
78.5%
5.5%
10.5%
5.5%
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%).
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?
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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.
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.
About Us
We look forward to introducing you
and your bank to Marketing Clarity.
Please feel free to call, write or email Mike Sells to learn more.401 W. Capitol Ave, Suite 400 Little Rock, AR 72201
(501) 666-8926
124 West Meadow, Suite 100 Fayetteville, AR 72701