Survey reveals a hidden customer exodus going on in banking
Consumers are not moving primary accounts to new competitors in droves (yet) but a major research study finds that people are quietly, and increasingly, purchasing profitable ancillary products from someone other than their primary institution. A better and more efficient marketing and sales process could help slow the flow.
Transaction account data often can pinpoint defections of consumer deposits into someone’s mutual fund or another institution’s CD, but it’s harder to know when one of your checking customers decides to take out a loan or a credit card with another financial institution. Turns It turns out more people are doing that.
As consumers have become more comfortable doing things digitally — especially since the start of the pandemic — the friction that used to hold people back from buying financial products at a competitor has all but disappeared. It doesn’t help that the new crop of digital-only financial institutions tends to compete on both price as well as ease and speed of application.
So even though the rate of consumers switching primary institutions (where they keep their checking account) is still low — around 6% according to Novantas — that isn’t the whole picture. Various sources, including Raddon and Cornerstone Advisors, have noted that consumers are much more open to having accounts or banking products scattered among multiple providers than they were in the past (dig deeper).
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