Report: Customers leave FIs for conveniences like mobile banking
Eleven percent of consumers are likely to switch primary financial institutions in 2012 in a quest for greater convenience and service, according to a new report announced this week by Javelin Strategy & Research.
Giant banks face even larger defections, with Citibank and Bank of America at risk of losing twice as many customers. This could mean huge potential losses for FIs; switchers manage $675 billion in deposits, and manage deposits that are 30 percent higher than customers who are unlikely to switch.
Likely switchers also are willing to pay an estimated $92 million in fees for just four value-added services: money orders, cashier's checks, safe-deposit box rentals, and mobile deposit. In addition, the report found that:
- More than half of recent switchers are under 35 years of age and use mobile technologies (smartphones and tablets) frequently.
- Mobile banking has emerged as a compelling factor for switchers, as they are more than twice as likely as all consumers to use mobile banking.
"Ultimately, consumers are driven by convenience more than fees and protests," said Javelin president, Jim Van Dyke. "Giant banks will need to drive home their messaging around convenience, mobile banking, and other services that smaller banks don't — or can't — offer. Smaller banks can play to their strengths of lower fees, convenience, and customer service, but they will need to beef up their mobile banking and mobile deposit offerings."
The Javelin report, Bank Switching in 2012: Giant Banks Remain Highly Vulnerable as Consumers Weigh Fees and Convenience and Fees, is based on three online surveys of 4,800 to 5,000 consumers each.
For more stories like this, see the Mobile Banking research center.