Don't Bank on Being the Primary, Study Finds
Banks relying on customer loyalty and cross selling as a major business strategy might want to take another look at who they are and how their customers feel. According to a recent study by A.T. Kearney, not very many retail banking customers feel an attachment to their financial institutions.
The study of 4,000 adult retail banking customers in the 20 largest U.S. metro markets found that only 35 percent consider their financial institution their "Primary Financial Institution" and that those institutions designated as primaries only hold 30 percent of a customer's total balance. Instead, many customers said they prefer to spread their financial dealings across a number of firms: 75 percent said they have relationships with more than four financial institutions and another 25 percent said no single type of institution would be attractive as a provider of comprehensive, consolidated financial products.
Regional banks received some favorable news, however. According to the study, they are much more likely to be named as primary institutions. In fact, the five institutions named most often among respondents as primary were smaller regional banks - two-thirds of customers from one such bank identified that bank as the primary. That compares to percentages of 10 and 15 at some of the nation's biggest banks.
One factor that all banks should pay attention to is errors with accounts because lack of such errors was named as the number one reason people would stay with their current banks. That compares to 25 percent of customers who said they would definitely leave their banks if they experienced three account errors.
Copyright © 2005 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 15, No. 10, 10/05
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