The Loss of Loyalty: 31 Million Consumers on the Fence About Switching Banks

The way consumers want to manage and control their finances has been evolving for the past decade, making the role of the bank marketer incredibly challenging. Consumer preferences change constantly for different reasons, and banks are grappling with a new landscape of competitors—many of which are not even banks. Amazon, Facebook and Apple are among some of the tech companies with plans to potentially offer consumers financial services products.

At the same time, 6.3 million consumers say they want to switch their bank in the next year, according to Resonate’s most recent consumer intelligence data. That’s up from the 5.6 million who were looking to switch last year. But perhaps even more importantly, Resonate has identified an additional 31 million who are on the fence. Meaning, when Resonate asked them if they plan to switch banks in the next year, they responded, “I don’t know.”

This level of indecision is yet another indication that loyalty among banking customers is continuing to decline. It’s a trend we’ve seen reflected in other industries as well, as challenger brands and disruptors have emerged with new models tailored to the wants and needs of today’s tech-savvy consumers. And while growing fickleness among consumers can be concerning to legacy brands, it also represents an opportunity for the companies that can realign their services and messaging around the values and needs of their current and prospective customers.

When we compare bank fence-sitters (i.e., those who do not know if they will switch banks this year) to those who do not plan to switch banks, we see notable differences in how these two groups view their relationship with their primary bank. Therein lies key insights for both product development as well as marketing strategy. Specifically, when compared to non-switchers, fence-sitters are:

• 69 percent more likely than non-switchers to say their bank has too many fees
• 43 percent more likely to say that their bank does not value them as a customer
• 33 percent more likely to say that their bank’s mobile app is too hard to use
• 16 percent more likely to say their bank does not help them reach financial goals
• 15 percent more likely to say their bank does not communicate enough about things that interest them

Established banks have front-end relationships with customers today and still control most of their banking needs and experiences, but thousands of disruptors like Venmo are getting between banks and their customers in small ways—by zeroing in on specific parts of the value chain. Most banking products are commodities. That makes it increasingly hard for banks to differentiate. Banks have instead differentiated through a mix of rates, fees, advice and additional services.

Banks have always been able to count on the fact that people believe switching banks is a hassle. However, current fence-sitters are 15 percent less likely than non-switchers to say switching is a hassle. And with so many new “bank-like” financial services providers entering the market, people’s perceptions of the ease with which they can switch banks is likely to increase.

Building and maintaining a strong relationship with one’s customers requires far more than just having competitive rates and fees. As banks compete to attract new customers (as well as reduce avoidable customer churn), the need for robust and predictive consumer insights has never been stronger. Banks need to improve how they connect with current and new customers with personalized messaging that aligns with their values and motivations.