The largest nationally-based US banks continue to capture a
higher proportion of new customers compared with regional banks,
according to a latest survey by market researchers JD Power and
Associates.
The 2010 Retail Bank New Account study found that on
average, large national banks attract 70 percent of prospective
customers who consider using them for a new account or new primary
financial institution, while regional banks secure only 59 percent
of these shoppers.
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The five large national banks included in the survey are Bank of
America, Chase, Citibank, Wachovia and Wells Fargo; the 16 regional
banks involved in the report include Citizens Bank, Fifth Third
Bank, HSBC, and TD Bank.
Promotional gifts and attractive short-term interest rates drive
the higher capture rate among the larger banks, with 24 percent
attracted to the bank for this reason compared to just 13 percent
at regional banks.
But of these newly acquired customers, 24 percent said they
“definitely will” or “probably will” switch banks again in the next
12 months.
“It’s important to keep in mind that the increased selection
rate doesn’t necessarily lead to an increased retention rate,” said
Michael Beird, director of the banking practice at JD Power.
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By GlobalData“The short-term boost in acquiring customers can become a
retention challenge in the long run.”
Unsurprisingly, the big banks also suffered as a result of
unfavorable reputations and perceived financial instability after
the financial crisis, with 11 percent avoiding a particular
institution for this reason compared to 7 percent at regional
banks.
Poor service and bank policies, particularly due to high rates
and fees, also contributed to the avoidance of both large national
and regional banks.
Banks have sought to re-focus their attention on providing high
quality customer service to boost their brand image.
Bank of the West, a San Francisco-headquartered regional bank
and subsidiary of BNP Paribas, is one that has benefited from
prioritising customers.
According to another of JD Power’s keenly watched surveys, its
Satisfaction Index, the bank scored the highest for customer
satisfaction in California for the third year in a row.
The bank has since doubled its investment in its marketing of
the JD Power ranking, from $500,000 in 2009, to $1 million this
year.
The 2010 Retail Bank New Account Study is based on responses
from 3,770 consumers who shopped for a new banking account or new
primary financial institution during the past 12 months.
