In recent years, banking services providers have experienced a notable increase in customer mobility, due largely to a decrease in customer satisfaction. According to Statista, “as of the third quarter of 2024, 28% of U.S. bank account holders expressed a willingness to change their primary bank at the next opportunity, more than doubling from 12% in the first half of 2019. This upward trend correlates with the dropping customer satisfaction among bank account holders in the United States.”1
A bank is a service provider — a service provider in a highly competitive, fast-evolving landscape of new products, services, and competitors. And while inertia remains the most important factor in banking customer retention, community banks can no longer depend on that alone to be the core of their retention strategy. They must contend with this “upward trend” of decreasing customer satisfaction if they have any hope of stemming the rising tide of switching banks.
Keep fees and rates competitive
High transaction and service fees, along with low interest rates on savings accounts and investment vehicles, have been significant motivators for customers to seek alternative banking solutions. U.S. News & World Report, in their article “6 Reasons to Switch Banks,” suggest taking a hard look at rates and fees: “a more competitive rate can impact long-term savings and monthly maintenance and overdraft fees can chip away at checking and savings account balances.”2 While fees and rates do have a significant impact on a customer’s satisfaction level, today’s banking customers’ desire to stay with their bank or leave hinges more on their overall service experience; their digital experience, in particular.
Stay focused on the digital experience
A national survey by the American Bankers Association found that when it comes to engagement with their financial services provider, over 75% of bank customers prefer mobile apps and online banking to any other.3 The rise of digital banking has, of course, had a monumental impact on customer expectations.
Even while banks strive to offer the best possible online experience, consumers have grown accustomed to fast, seamless, hassle-free online transactions and service. They now expect the same level of ease and convenience in their banking experience that they receive with online retailers, such as Amazon. Hence, the shift towards digital platforms is a double-edge sword for banks; while it has created opportunities for community banks to grow their share of wallet, it has, at the same time, made it easier for customers to explore and transition to banks offering what they perceive as a superior digital experience.
It’s no surprise that younger consumers – digitally-savvy Millennials and Gen Z, in particular, – are more inclined to switch banks. A study by J.D. Power revealed that “13% of bank customers are likely to switch institutions within the next 12 months, with younger demographics showing a higher propensity for change.”4 This demographic is also more likely to maintain multiple banking relationships, leveraging various services to meet their diverse financial needs. The ease of switching, facilitated by advancements in digital banking, has reduced the hassle traditionally associated with changing banks, making it more appealing to younger customers.
Make it personal
Personalized service, tailored products, and a commitment to the local community are hallmark “personality traits” of the community bank. Through marketing content that focuses on individual customer needs and its involvement in the community, a local bank fosters trust and loyalty, distinguishing itself from regional, national and neobanks. What form might that marketing content take? It can take the form of messaging around employee accomplishments and anniversaries, participation in charitable events and causes, the celebration of national observances such as Veterans Day, Memorial Day, and Breast Cancer Awareness Month, to name a few. This type of messaging not only gives a bank a more personal character, but also enhances customer satisfaction and encourages long-term relationships – both of which lead to increased retention rates.
Keeping things personal can also help attract and retain those younger customers who tend to move easily from bank to bank. While Millennials and Gen Z customers favor digital banking for its ease, they also value personalized experiences when making significant purchases like homes. While they appreciate the convenience of digital tools, many prefer a blend of online efficiency and human interaction during complex transactions. According to a Phase5 survey, “while Gen Z consumers prefer digital tools for routine banking tasks, such as bill payments and fund transfers, face-to-face interactions remain vital for financial advice and guidance. Notably, 50% prefer in-person consultations with a financial advisor.”
The solution to switching: consistent marketing messaging
Effective marketing messaging is crucial for community banks aiming to attract and retain customers. Remember, too, that earning a new customer is 7 times more expensive than keeping one. By highlighting unique value propositions – such as personalized relationships, community involvement, competitive rates and fees, and user-friendly online services – with consistent messaging, a community bank can continue to differentiate itself from competitors while reminding consumers of the value it brings. And, with that, keep customers satisfied and stem the tide of switching.
Bank Marketing Center
We’re Bank Marketing Center, the leading, subscription-based provider of automated marketing services to community banks. Our goal is to help bank marketers with topical, compelling communication with customers that builds trust, relationships, and revenue. And we do this through automating critical bank marketing functions, such as content creation, social media management and digital asset management, as well as regulatory and brand compliance.
We also want to share what we know – and learn along the way – with all our community banking friends. Whether it’s the latest on AI technology, suggestions on how to attract and retain top talent, or the importance of data protection, we’re here to make bank marketing the best it can be.
Want to learn more about what we can do for your community bank and your marketing efforts? You can start by visiting bankmarketingcenter.com. Then, feel free to contact me directly by phone at 678-528-6688 or via email at nreynolds@bankmarketingcenter.com. As always, I welcome your thoughts.
Sources:
1Statista. “Share of customers willing to change their primary banks in the U.S. from first half 2019 to third quarter 2024.”
2ABA. “National Survey: Record Number of Bank Customers Use Mobile Apps More Than Any Other Channel to Manage Their Accounts.” November 22, 2024.
3US News & World Report. “Six reasons to switch banks.” August 20, 2024.
4JDPower. “Retail Bank Customer Satisfaction Holds Steady but Trust Declines.” March 28, 2024.