A customer has been with your company for a decade. But, that new bank next door just offered a flashy cash-back deal, and before you know it that customer has bolted for the door. Bank loyalty is a big question for today’s financial services industry, and figuring out why people switch – and how you can stop it – is an important goal.
Why are people leaving?
To answer the question of why people are leaving their current banks, the Sells Agency recently conducted a study of American consumers to find out the reason behind their departure, where they are headed and what they think about traditional banks.
“A small chunk of customers leave for new products elsewhere.”
As reported by The Financial Brand, the Sells Agency study found that 3.5 percent of consumers switched banks because of a new product or service. Naturally, the biggest reason for the switch is a move, with 41 percent changing locations, but not finding their familiar bank branch waiting for them upon arrival. Another significant percentage was those who were upset with their current bank – 20 percent left for this reason – while 6.8 percent cited inconvenient branch locations as the reason for the transition.
Where are they going?
Understanding why bank customers are leaving is only the first step. If you want to ensure brand loyalty, it helps to know where they are going.
Most people are headed toward regional banks, with 29.6 percent of respondents citing this type of financial institution when questioned by the Sells Agency. Local banks were next, at 20 percent. Credit unions rounded out the bottom of the list with 15.6 percent. When it comes to the motivation behind these decisions, people tend to prefer convenient branch locations. Only 3.5 percent chose a bank based on reputation.
Give customers options for their banking needs.What can your bank do?
Losing even one customer is one too many. Say you see a slight increase in the number of people switching banks. Here is what you can do to keep them loyal:
1. Go mobile
It is no surprise that mobility is a driving factor behind a consumer’s decision to bank with one institution or another. According to a Bain & Company report on consumer loyalty in the financial services industry, mobile banking is a key part of brand loyalty. For example, consumers dedicate nearly half of their banking to mobile devices. Over the past year, the amount of people using mobile applications for banking increased by 19 percent. Online banking on computers declined by 3 percent. Integrate mobility into your bank if you want some loyal customers.
2. Balance tech and traditional
Mobile is a big part of loyalty, but it is still only one part. Bain & Company found that consumers are more likely to be faithful to your brand if you offer them variety – or an “omnichannel” approach. This means creating a system where they can bank in person or online, on their computers or on their phones. Ideally, you want customers who pay bills online, ask question of tellers in person and balance their banking between traditional and technological.
3. Provide more options
You want your bank to be a one-stop financial-services shop for your customers. Banks that offer a wide range of products and services can do that. Bain & Company noted that more than one-third of global banking consumers bought another product at a financial institution other than their primary bank. If possible, consider increasing the number of products you offer at your bank. More options will mean customers have an increased chance of staying put, rather than seeking out a competitor.
Overall, create a bank that is on the cutting-edge of technology. That includes streamlining the teller experience via cash recyclers, creating easy-to-use mobile applications and offering customers more ways to bank than ever before.