June 21, 2012

Bank Transfer Day may be six months past, but big banks still face a threat of losing dissatisfied customer, according to a report released today from Pleasanton, Calif.-based Javelin Strategy & Research.

The report surveyed 5,034 bank customers in March, and included those who have switched their primary financial institution in the last 12 months, those considering doing so, and those not considering doing so.

About 11 percent of consumers surveyed in indicated they are considering switching primary financial institutions in the coming year, putting $675 billion in deposits at risk, according to Javelin. The report found that Citibank and Bank of America are the most vulnerable giant banks by far, with as many as one in four customers at risk of switching, with many citing fees as the reason.

However, the report also found that convenience trumps fees. Bank of America, Chase, Citibank, and Wells Fargo remain the consumers’ yardstick for compelling convenience and control built on a foundation of big branch systems, broad ATM networks, convenient online banking, and, increasingly, the always-on power of mobile banking, said Javelin. In order to compete, regional rivals, community banks, and credit unions must smartly prioritize investments in technology that redefines personal banking and personal security by sharing control with customers — with an urgent emphasis on mobile banking and mobile deposit, says Javelin Senior Analyst Mark Schwanhausser, who authored the report.

"Credit unions and smaller banks cant afford to do everything that Chase or even USAA can do, but they can combine their natural strengths and have good enough technology to appeal to the Gen Y consumer," says Schwanhausser.

Schwanhausser advises smaller financial institutions to invest in mobile if they haven't, and if they have, to consider offering some manner of mobile RDC as well.

"Consumers are no longer satisfied with an 8-5, weekday relationship," he adds.

He says mobile RDC is a particularly important tool that can help regional banks develop an identity and credit unions counter their lack of ATMs and branches to woo younger members.

Conversely, Schwanhausser warns big banks to not ignore the lessons of Bank Transfer Day. "they can't look back and say 'we're past it,' there's a lot of stormy skies ahead."

The survey indicated that while consumers loathe fees they feel are "punitive" -- such as overdraft fees or charges for using a debit card -- they are willing to pay for value-added services such as money orders, cashier’s checks, safe-deposit box rentals, and mobile deposit.

"The main thing is, there is still a lot of dissatisfaction," Scwanhausser says. "Banks need to learn from Bank Transfer Day and the changing attitudes of consumers."

ABOUT THE AUTHOR
Bryan Yurcan is associate editor for Bank Systems and Technology. He has worked in various editorial capacities for newspapers and magazines for the past 8 years. After beginning his career as ...