What Makes Consumers Switch Banks

BY Courtney Huckabay
Featured image for “What Makes Consumers Switch Banks”

One-​fourth of consumers in the U.S. said they would consider switching to a bank with no branch locations, up three percentage points from last year. Across North America, 26 percent of Millennials would consider switching to a branchless bank (up three percentage points from last year), and 34 percent of mass affluent consumers would do so, up ten percentage points from 2015.

The report, titled “Banking on Value: Rewards, Robo-​Advice and Relevance,” is based on a survey of more than 4,000 retail bank customers in the United States and Canada, and is the most recent report in Accenture’s multi-​year research on consumer banking attitudes and behaviors.

Non-​traditional banks continue to gain momentum

The survey found that consumers are increasingly willing to bank with non-​traditional players, closing the gap with those switching to large regional or national banks. Eleven percent of North American consumers (11 percent in U.S. vs. nine percent in Canada) switched banks in the past year. Among those respondents who have switched, 33 percent joined a non-​traditional provider (online-​only bank, payments providers, retailer or insurer), versus 23 percent who switched to a large regional or national bank. Of those who switched, 15 percent of consumers ages 55+ joined an online-​only bank, up from only five percent who did the same last year. Millennial switchers increased the move to online-​only or payments providers from 24 percent in 2015 to 27 percent this year. Consumers ages 35–54 had a reverse trend; 30 percent moved to online-​only or payments providers in 2015, down to 24 percent in 2016.

Banks and credit unions should be targeting Potential Bank Switchers with ads/​coupons in their mailboxes, because AudienceSCAN data revealed 44.3% took action based on these in the past month.

Consumers no longer view switching banks as a hassle, which puts pressure on firms to not only attract new customers, but find ways to keep existing customers loyal,” continued Edmondson. “According to our research, 79 percent of consumers consider their relationship with their bank to be purely transactional – this is a missed opportunity for banks that now have access to technology that can help them provide more tailored offerings, particularly as more consumers are open to receiving value-​added services from their bank. In fact, 45 percent of consumers said the top reason they would stay loyal to their bank is if it offered discounts on purchases of interest.”

Online channel dominant, but branches still relevant

While nearly one-​quarter of North American consumers would consider switching to a branchless bank, the survey found that the branch remains popular. Today, one-​fourth of survey respondents use the branch at least weekly, and it remains the second most preferred channel, after online.

Branches should tout their benefits in television commercials. The AudienceSCAN study revealed 46.7% of Potential Bank Switchers took action after seeing TV spots in the past month.

By a wide margin, those who use the branch prefer “full service branches,” which include extended office hours and full sales support, over all other formats (61 percent). However, 19 percent of Millennials prefer “light branches” – highly automated with videoconferencing access to remote specialists.

According to the survey, the vast majority (87 percent) of consumers say that they will use the branch in the future. Respondents said they anticipate using the branch two years from now because “I trust my bank more when speaking to someone in person” (49 percent), and “I receive more value from my bank when speaking to someone in person” (47 percent).

Today’s consumers expect their service providers to understand and anticipate their needs and offer a seamless experience across digital and physical channels – and they expect this as much from their bank as they do from retail stores and Internet giants,” Edmondson concluded. “Even as consumers indicate interest in robo-​advice and online banking, they continue to demand human interaction at the branch to handle more complex banking needs. Banks need to find ways to blend the digital and branch experiences to provide more value-​added services to their clients, and move past their role as a transactional service provider.”

Despite security breaches, customers willing to share data

Nearly one-​fourth (23 percent) of respondents have experienced at least one incident of their financial data being hacked online over the past two years, including 25 percent in the U.S. and only 16 percent in Canada. Yet, despite this, consumers are willing to share their data in order to receive better service from their bank. Nearly two-​thirds (63 percent) of respondents are willing to give their banks direct access to personal information, such as mortgage, credit card and student loan data, so their bank can use it to present them with suitable products and services. Respondents want banks to use their data to provide access to lower prices, faster service (such as rapid loan approval), more relevant advice, and personalized offers based on location.

Banks and credit unions should tout their security measures and fraud departments to Potential Bank Switchers. According to AudienceSCAN research, ads on a social networks will work on 40.5% of this audience.

Faster service and lower costs among benefits consumers expect from robo-advice

Nearly one-​half (46 percent) of bank customers are open to use robo-​advice for banking services – computer-​generated advice and services, independent of a human advisor – according to the report by Accenture. Consumers in the U.S. are more open to robo-​advice (46 percent) than Canadian consumers (43 percent).

Consumers welcome robo-​advice from banks to determine how to allocate investments (79 percent), the type of bank account to open (74 percent) and for retirement planning (69 percent).

It’s well-​known that robo-​advice is gaining significant traction in the wealth management industry; however, our research shows this trend is also picking up in retail banking,” said David Edmondson, senior managing director of Accenture’s North America Banking practice. “Consumers will continue to dictate how, when and where they want to interact, and banks have an opportunity to use intelligent automation and robotics to simplify and improve the customer experience. Successful banks will strike the right balance between human and machine interaction to elevate their role in customers’ lives beyond simple transactions and become a go-​to resource.”

Target millennials with more information on robo-​advice. AudienceSCAN data showed 32.2% of Potential Bank Switchers fall into this age range: 25–34.

This year’s survey found that speed and convenience (50 percent) and lower costs (29 percent) were cited by respondents as the primary benefits of robo-​advice, with millennials and mass-​affluent consumers expressing the most interest in the service.

AudienceSCAN data is available as part of a subscription to AdMall for Agencies, or with the SalesFuel API. Media companies can access AudienceSCAN data through the AudienceSCAN Reports in AdMall.