A recent survey of bank customers around the world found that while relatively high dissatisfaction was to be expected many of these consumers also know how to make changes to their banking to suit their needs.
Ernst & Young recently surveyed nearly 30,000 banking customers worldwide to learn something that should not come as a surprise: most people are unhappy with their banking situation. This study also found, however, that these customers were twice as likely to find a new bank, which should also not be alarming since less than half reported that their current bank offers varying product and service options that better suit individual needs.
While the survey does not necessarily tell us anything new it does expose how little power banks actually have over their customers. Since it is quite easy for customers to switch banks on a whim as they exploit the ease of information and the promotional offers some banks will produce in order to entice new business, banks are always on the defensive. This has led to the development of more and more specialized perks, especially in the form of loyalty rewards, just to make sure that customers stay in one place.
Clayton Baker is a principal in financial services at Ernst & Young and he says,
The way banks are going to succeed in this kind of increasingly transparent pricing environment, and a world where you can respond to the next great offer you see on TV, is this whole notion of relationship bundling.
This could mean banks offer loyal customers better interest rates on savings accounts over time or perhaps finding ways to discount an auto or a home loan when combined with other services. Automatic payments, direct deposit, and other services also usually offer some kind of discount or premium. Baker goes on to say that combining products in this way in order to retain a loyal customer base is becoming more and more popular these days and development of such concepts will continue to increase. Indeed, banking competition in America continues to grow, especially with online banking (and thus the ability to provide service to anyone and, more importantly, from anywhere) so bankers have to get more creative.
With banking reform reducing the number of fees banks can charge (and as a result reducing profits) bankers also have to find other ways to continue providing services while also cutting costs. Fortunately, the survey’s findings are consistent: approximately 90 percent of consumers readily expect to be rewarded, financially, for their banking loyalty and only about 12 percent say that they are currently planning to switch banks. Although dissatisfaction seems low, the resoundingly common reason for switching pertains to fees. Not surprisingly, about 90 percent of all banking customers expect basic services to be free. Baker continues:
Customers are less trusting of their financial institution, and they feel the fees and charges are a bit excessive. They feel like ‘We ought to get a break on some of that.’
Most customers feel that if they already have multiple accounts through the same bank—and are a model customer, at that—they should not have to deal with things like late fees on credit card payments or simple deposit fees, for that matter.
In light of all of this, it makes sense that the larger banks will find it easier to survive in this climate. Smaller banks, then, will need to continue to find ways to compete. However, the survey also shows that customers like to mix and match their banks according to the services they need so these smaller banks will not necessarily need to offer everything in one place. Since only 1 in 3 customers utilize a single bank, there is enough evidence to suggest that small banks won’t have much trouble earning and retaining business.