Looks like consumers are in a fee-fighting mood, and are switching away from big banks that try to impose them.
An independent study shows a distinct increase in the number of bank switches toward smaller banks. The J.D. Power and Associates 2012 U.S. Bank Customer Switching and Acquisition Study, released Monday, shows that an increased number of American consumers switched banks late in 2011 — and when they did, fees were a big reason.
“When banks announce the implementation of new fees, public reaction can be quite volatile and result in customers voting with their feet,” Michael Beird, director of the banking services practice at J.D. Power, in a press release.
“It is apparent that new or increased fees are the proverbial straws that break the camel’s back,” said Beird. “Regardless of bank size, more than one-half of all customers who said fees were the main reason to shop for another bank also indicated that their prior bank provided poor service.”
The study looked at 5,062 customers who shopped for a new primary financial institution in the past 12 months. The annual study found that the number of defectors had risen steadily in the past three years, from 7.7 percent in the 2010 study to 8.7 percent in 2011 and 9.6 percent in 2012.
Defections hit big banks harder. About one in 10 consumers defected from a big banks, regional banks or midsize banks in 2011. Compare that to small banks and credit unions, where only one in 100 switched.
When the customers of the larger banks were asked why they dropped their bank, one third cited fees as the major trigger.
It’s no secret that big banks are struggling to find new revenues. Understandable. They’ve been stung by the recession, and slapped around by federal regulators for programs such as overdraft fees and credit card pricing policies that were, shall we say, less than transparent. Can’t blame them for trying to make it up somehow.
But they’re having to do so more transparently now, in the face of a now more-aware group of consumers, armed with social media networks that let protests spread like wildfire. Witness the swift way that the