Who hasn’t had the experience of seeing someone else make such an inexplicable decision that you just have to ask them “What were you thinking?” Many in the banking industry feel that sense of bewilderment when contemplating what motivates consumers to switch banks.
But moving from one bank to another isn’t an out-there kind of move; switchers have reasons they believe to be very valid. Finding out what inspires account holders to switch banks can help you better understand how you can get them to switch to your bank—or, stay put if they’re already part of your financial institution.
Digital Scientists did some research for Deluxe in late 2014 to explore what motivates switching behaviors. We’ve all seen the data that suggests life circumstances beyond a financial institution’s control—like a job change or relocation—are the most common reasons consumers change banks. Digital Scientist’s study, however, indicates other factors have greater weight.
Having one foot out the door
In fact, having another account with a different financial institution was the top reason the switchers surveyed had decided to leave their old primary financial institution. We know it’s not unusual for households to maintain multiple checking accounts.
Individual members have their own accounts, different household expenses may get paid from different accounts, or a consumer who’s operating a home-based business may also have a business account. That secondary banking relationship can easily become a primary one if the consumer decides to leave his or her current PFI or if you make it easy for them to consolidate all their accounts at that secondary bank.
Digital drives change
Consumers also switch banks because they want a better digital experience. This is especially true for Millennials.
Today’s consumer wants the best online bill pay, mobile banking and online banking experiences, and they’re willing to change to a different bank to get it. Likewise, they’ll switch to secure a more satisfying experience, including better service, lower fees, better rates and more convenient branch locations.
Financial institutions that want to stand out in this area need to explore all areas of their account holders’ experience. For many consumers a painful switching process could be enough to prevent a new them from becoming fully engaged.
Two of the four P’s of marketing
Relevancy of products and more attractive pricing also drive consumers to switch.
Some are looking for better loan products. Others want rates that better fit their expectations and budgets, and still others just want some sign—like targeted and relevant marketing materials—that their PFI really understands who they are and what they need.
Referrals drive unhappy consumers
Finally, Digital Scientists’ research found that a lot of people choose a different bank because someone they know already banks there. Nearly a quarter of those polled said a referral from a friend or family member inspired them to switch their PFI.
We all know the power of referrals but what are you doing to make sure those referrals are coming your way?
Our whitepaper, “The Anatomy of Consumer Switching Behaviors: Solving the Stumbles that Stand Between Switchers and Profitable Engagement,” provides additional insight into what motivates consumers to switch banks, and also offers actionable recommendations for FIs seeking to boost acquisitions and deepen engagement. It’s available for free download here.