Foresight Research: Expect a Spike in Consumers Switching Banking Providers Due to the Pandemic

ROCHESTER, Mich., Oct. 21, 2020 (GLOBE NEWSWIRE) -- Foresight Research surveyed almost 11,000 banking customers and credit union members in 44 markets to find out what is really going on in the world of banking from the customer/member’s point of view. Then a second survey was conducted during the pandemic of almost 700 customers and members to find out what the pandemic had changed in the banking industry. The supplemental survey uncovered a hot spot of churn in the banking business. Churn increased from 12% (over two years) prior to the pandemic to 22% expected churn in the next year or two. For large multi- location banks, it was a whopping 27%. A lot of banking consumers will be in play – like in the tens of millions.

So, for a fraction of what a study like this would cost since it is syndicated, this report spells out: where people bank and how they choose their banking relationship. Bank customer and credit union member expectations and satisfaction and what specific products are purchased. The second survey contained the same questions. By comparing responses, the impact of the pandemic can be measured. With this information in hand, current financial institutions could slow the churn, or competitors could attract the switchers. Here are some more of the findings.

During the pandemic, satisfaction tanked in many areas. This does not seem surprising considering that many lobbies were closed or had limited hours. A total of 16 measures exist in this report (expectations and satisfaction) and there was pretty much universal decline. Some of the fundamental banking operations (like processing transactions accurately or handling problems) – high priorities for customers and members - were negatively impacted by lobby closure or reduced access. Did digital banking become a lot more important? Not really, that was already important to most customers and members.  

More grim news. Of the people who intend to leave their financial institutions almost 3 of 4 are Gen Z or Millennials - the very block of business that drives the future of your financial institution. And overwhelmingly they are men.

So, what drove the high churn? Even though satisfaction declined greatly (except at credit unions) that was not the culprit. Customers and members were generally empathic likely thinking “we are all in this together.”  How can that be determined? The surveys showed that as satisfaction declined so did expectations. It was all about financial issues like interest rates and fees. The switchers while forgiving also are looking to reduce cost or increase interest on items like money market accounts, CDs, etc. Seems reasonable given the high rates of unemployment, under employment and the uncertain future.

The big benefactors are credit unions. The generally lower fees and better interest rates of credit unions will offer an additional competitive advantage during this these uncertain times. Credit unions offer what these switchers are looking for and there will be tens of millions of switchers. Further, the credit union members were significantly less likely to leave the credit union than the customers of the large banks.

For many years, large national and regional banks have had the unfair advantage of information that analyzed the banking customer and credit union member. The outcome – better operational process, better training, greater brand loyalty and more effective marketing strategies. Now the tide is turning - local banks and credit unions can compete on a level playing field with this new report (and others by Foresight Research) as a guidebook.  The report lays out the facts and explores what actions will help financial institutions get a leg up.

Foresight Research (a Michigan marketing research company) and a leader in cost effective syndicated market research has been working with Fortune 500 companies for over 20 years. Visit the website to find out more about this report and other available reports.

Steve Bruyn
248.608.1870 x 12