More customers are ditching their banks as a result of fees, poor service and unmet expectations, according to a new survey from J.D. Power and Associates.
The market research firm's 2012 U.S. Bank Customer Switching and Acquisition Study, released Monday, found 9.6 percent of customers who shopped for a new bank account or primary lender in the last year said they switched banks.
That's up from 8.7 percent in 2011 and 7.7 percent the year before.
Fees are the main reason customers shop for a new bank, with one-third of customers of big banks and regional lenders citing fees as the main trigger for considering a switch, according to the study, which examined the bank selection process.
"When banks announce the implementation of new fees, public reaction can be quite volatile and result in customers voting with their feet," said Michael Beird, director of J.D. Power's banking services practice.
Smaller banks and credit unions are benefiting from an increased exodus from larger banks on the heels of last fall's Bank Transfer Day, the survey found.
That initiative, a grassroots effort calling on consumers to switch from banks to credit unions, followed Charlotte-based Bank of America Corp.'s announcement last year that it would begin charging some customers $5 to make purchases with their debit cards. The bank later scrapped the plan, as did other lenders that had begun testing or charging similar fees.
But customers are weighing more than just fees when deciding whether to switch banks, J.D. Power found. Customer service is also a major factor, and new fees can act as the "straws that break the camel's back" when customers are already unimpressed by their bank's service, Beird said.
For banks looking to capture new customers, promotions and cash incentives are powerful tools, the study found. But just 32 percent of customers who selected a new bank because of promotions said they definitely would not switch banks again in the next year.
By comparison, about half of customers who chose a new bank because of good service or positive recommendations said they definitely would not leave in the next year.
The 2012 study is based on a survey of more than 5,000 customers who shopped for a new bank account or primary lender. It was conducted in November and December and includes Charlotte-based Bank of America Corp., Wells Fargo & Co. and other lenders with a presence in the Carolinas.
J.D. Power did not release switching and acquisition rates specific to those banks.
For customers thinking about looking for a new bank, J.D. Power and Associates offers the following tips:
• Shop around to compare terms and service before deciding on a bank, the same way you might before buying a car. Don't forget about direct online banks, as their fees and rates might offset inconvenience due to the lack of physical branches.
• Don't be swayed by promotion gifts or cash alone. It's more important to ensure the bank you are selecting offers the right products for you and that the fees for those products are in line with what you're willing to pay.
• Read account brochures and disclosures carefully, and don't be afraid to ask questions about the products. It is important to fully understand how fees are charged - and how they can be avoided.
This above article written by KRISTEN VALLE PITTMAN / Charlotte Observer WCNC.com
Posted on February 28, 2012 at 7:05 AM
Discover the Founders Difference!!
The tough economic climate and ongoing banking debacle has prompted many families to look closely at their financial service provider(s). As people incur new and higher fees, experience unfair business practices and less personalized service, record numbers are discovering the credit union difference and switching their accounts to local credit unions. Many of your employees know first-hand the Founders difference: better rates on loans and savings, lower (or no) fees, and a bonus dividend this year - just in time for Christmas!
So why the surge in popularity for credit unions? As not-for-profit financial cooperatives, credit unions are in business to serve their member/owners with excellent financial services at an affordable cost. They have no stockholders or bank holding companies to enrich and are guided by a volunteer board of directors elected from the membership to serve the common good.
It seems history has repeated itself! Founders was established in 1950 when Colonel Elliott White Springs, President of Springs Mills realized the banks were not providing the textile workers affordable loans and systematic savings. The concept of offering a credit union as a benefit for the employees was so successful that credit union offices were opened in the other cities where Springs operated. Instead of being rejected by banks, employees were embraced by the credit unions that operated for their financial well –being.
Today, Founders maintains that same philosophy: doing what is in the best interest of the member. We still have no fees to join and require only a $5.00 deposit to be a member. Our broad range of services gives people more choices - from mortgages with quick turn-around, Online Banking and Bill Pay, e-lending and e-statements. Yet we’re still known for our personalized service, affordability and uncomplicated way of doing business.
Moreover, Founders gave back $10 million to our borrowers and savers in the form of a bonus dividend. Did the banks’ customers receive a bonus dividend? Well, probably not unless they were stockholders!
The good news is that many companies, both large and small, have partnered with Founders so their employees can save money and have greater peace of mind knowing their money is safe and sound. The employees quickly recognize the credit union difference but also value their company who makes the benefit possible and cares for their financial well-being.