Why Consumers Leave Their Financial Institution

Why did that accountholder leave your financial institution? Which “pain points” were the culprits? How many households are unhappy — or have already decided to switch where they bank? Bruce Paul and Brian Rivel from Rivel, Inc., answered those questions in their March 2021 webinar with Credit Union Webinar Network.

Rivel Banking Benchmarks, the world’s largest banking survey, conducted over 200,000 interviews with banking consumers, in 24 states, from over 3,000 US banking institutions. “This is now the largest syndicated banking study in the world, definitely in the United States. The idea behind this is to understand how banking consumers not only view their primary institution but others as well,” stated Brian. Rivel, Inc., uses 92 metrics to rank everything from policy and procedure to technology and customer service.

One topic covered in the study is what makes banking consumers leave and what gives them the most angst? The study revealed 34% of households, 49% of businesses are unhappy with their current financial institution and open to switching. It also revealed 17% of households and 31% of businesses said they are switching financial institutions today. “This is not some analysis we’re doing. We’re actually asking people directly — are you switching institutions? Are you fed up with where you’re at?” Bruce commented.

At the beginning of the pandemic, switching went to zero, mainly because branches were closed and consumers were more conservative. As the pandemic went on, dissatisfaction rose higher and higher. Now, people are taking action, deciding they are going to switch as they feel more comfortable getting back into the world. Bruce remarked “The percent of people who say they are defecting has almost doubled in the last six months (Sept 2020 to March 2021). And frankly it is going to continue to increase as people get more and more comfortable resuming their ‘regular’ lives. I’ve never seen growth like this — granted I’ve never lived through a pandemic. The growth and the opportunity are amazing and it should affect what you’re doing as an institution.”

As a credit union, it leaves you asking what marketing messages resonate with them and how do you capture this market? Bruce and Brian suggest focusing your marketing on the top three pain points to entice those who are actively searching for a new financial institution.

The top 3 reasons people switch financial institutions. (January 2021)

Rates: There are two different kinds of rate shoppers. There are sophisticated shoppers who research many different financial institutions to find the best rates and lazy shoppers who will move to the first institution that has a better rate than their current financial institution. “The people who promote to the ‘lazy shopper’ get more profitable business than the people who focus on sophisticated shopper,” said Bruce. Your marketing message should be that your credit union has good rates. The lazy shopper will move to your credit union if the rate is better than what they’re getting now, it doesn’t have to be the best rate out there.

Not Proactive: One respondent to the study said “They are really nice. But I always have to research about what services are best for a small company like mine, and then go in and ask if they have them. They usually have them, but I wish they could tell me first rather than having to figure it out for myself.” Big financial institutions outscore the smaller financial institutions in proactivity. It is critical for credit unions to focus on being proactive with their member’s needs to keep and gain market share.

Getting the Runaround: Runaround can be related to poor staff training. How well is your staff trained? Turnover with new people who do not yet know the answers, or a new policy that is not readily available to your staff at the time can make your credit union look bad. Another respondent described runaround as, “You look on the website and can’t figure it out. You call the call center and they are no help. You go into the branch and the teller immediately picks up the phone to ask the call center. Seriously!” Ensuring your staff is up-to-date on training, policies, and procedures will help your financial institution please and keep current account holders.

Brian expressed, “The key takeaway is to first, make sure you are pleasing your current members, and then go strong after the new ones. There is a lot of opportunity to grab market share in this environment. If you’re a marketer, and you do a good job of making your members happy then go to the CEO and say double my marketing budget — we’re never going to have this opportunity again.”

Brian and Bruce’s webinar, The Top 10 Reasons Consumers Leave Their Financial Institution, goes more in-depth on how to market to switchers, covers the full top ten reasons, answers relevant live-participant questions, reveals actual numbers of switchers from the study, and more!