People switch banks for all sorts of reasons. For some, it’s because they have to. A new job means moving from Philadelphia to Denver, and the regional bank that holds their checking account just won’t do.
But others want to leave–whether they’re lured away by a rival offer, scared away by a scandal or driven away by high ATM fees, bad service or inconvenient branch locations.
Yet switching banks is no simple affair. No matter how much consumers might dislike their current bank, many stay put because nagging questions and fears prevent them from pulling up stakes. It’s proven to be a high hurdle for some banks to clear as they strive to not only attract new customers, but also become their customers’ primary financial institution.
To be sure, retail banking customers do vote with their feet. Almost one in five moved a portion of their banking business to another provider in 2015, according to research from Accenture. But the key word in that sentence is “a portion.” These defections are rarely complete. A rising number of bank customers spread their business–checking accounts, home mortgages, car loans, retirement accounts—across several institutions.
Some of the blame can be laid on the consumer. Many are too lazy to make the complete switch. Others don’t see much difference between one institution and another. Why bother to change banks if the features and services are essentially the same? There is also the issue of familiarity. Managing bank accounts can prove a tedious chore. If a customer already feels comfortable at one bank, they may not be eager to start over and learn the ropes elsewhere.
And for those who have automated as many payments as possible, or entered the 16 digits associated with their debit card at multiple ecommerce sites: Who has the time to untangle all those tentacles and set things up again at a new bank?
But if apathy represents a problem for the banking industry, and consumers are afraid to change, then the dilemma to some degree is of the industry’s own making. Banks and credit unions strive to make it easy to open a new account, but almost no one makes it easy to leave.
It’s a double-edged sword. Traditional retail banks already face enormous competition, and it’s only getting worse with the rise of mobile banks and fintech companies. A lot of time and energy gets spent wooing new customers, especially the all-important millennials. No one wants to make it easy for those customers to walk out the door.
But rather than tying account holders to the mast, banks need to expend just as much energy keeping them happy and engaged. That creates the kind of customer who not only displays loyalty, but also tries out new products and services eagerly while shouting your praises to friends and family.
What about the prospective customer searching for a new bank? You need to acknowledge the difficulty of switching banks, but also provide peace of mind. That can include presenting a step-by-step guide for getting a debit card and setting up online banking; making customer service representatives available who specialize in switching; and even offering guarantees to back up claims that switching can be painless.
To put it simply: Reassure them that you will be there to make the change as smooth as possible. Before you prove to a prospective customer the time-honored adage that change is good, remember to be good to them first.
Sue Hines is head of customer engagement at Informa Research Services. Sue has more than 30 years’ experience in consulting and brand measurement. She brings deep understanding of consumer mindset and the ties that bind people to what they buy and the organizations with whom they do business.
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