WESTLAKE VILLAGE, Calif. (2/28/12)--In 2011, roughly 9.6% of large, regional and midsize bank customers defected from those institutions, and credit unions and small banks were the beneficiaries, says new research released Monday from J.D. Power and Associates.
The research firm's "2012 U.S. Bank Customer Switching and Acquisition Study" noted that "consumer backlash against bank fees, coupled with poor service and unmet customer expectations, has fueled increases in defection rates among customers of large, regional and midsize banks."
"On the heels of 'Bank Transfer Day' on Nov. 5, 2011, the beneficiaries of the increased exodus from larger banks are primarily smaller banks and credit unions," J.D. Power said in its news release announcing the study results. The firm surveyed more than 5,000 customers who shopped for a new financial institution or new account during the past 12 months.
"Acquisition of new customers by smaller banks and credit unions has increased by 2.2 percentage points to an average of 10.3% in 2012 from 8.1% in 2011," said J.D. Power.
The report noted that the defection rate of customers at midsize to larger banks averaged between 10% and 11.3% last year, while small banks and credit unions lost only 0.9% on average, a significant decline from the defection rate the smaller institutions saw in 2010, said the firm.
The 9.6% of customers who said in 2012 that they had switched during the past year to a new provider is up from 8.7% who switched in 2011's study and 7.7% in 2010's study.
About a third of customers at big banks reported fees as the reason they looked elsewhere. The report also indicated that many big-bank customers were already unhappy with the customer service there, so when fees were announced or raised, they had more incentive to switch.
"Regardless of bank size, more than one-half of all customers who said fees were the main reason to shop for another bank also indicated that their prior bank provided poor service," said Michael Beird, director of the banking services practice at J.D. Power and Associates.
J.D. Power also noted that consumers thinking about switching institutions should:
- Shop around to compare terms and services;
- Avoid being swayed by promotion gifts/cash alone.
- Read account brochures and disclosures carefully, and ask questions.