Javelin Warns $675 Billion in Deposits at Risk Due to Bank Switching
Citi, Bank of America and Other Giant Banks are Highly Vulnerable, According to Javelin Bankographic BenchmarkA new report from Javelin Strategy & Research indicates 11% of consumers are likely to switch primary financial institutions (FIs) in 2012. Giant banks face even larger defections, with Citibank and Bank of America at risk of losing twice as many customers.
The Javelin FI Vulnerability Index(TM) estimates huge potential losses for FIs because switchers manage $675 billion in deposits, and manage deposits that are 30% higher than customers who are unlikely to switch. Likely switchers also are willing to pay an estimated $92 million in fees for just four value-added services: money orders, cashier's checks, safe-deposit box rentals, and mobile deposit. The report examines the factors behind why customers stay - or leave - their primary FI and recommends specific strategies that giant banks, regional banks, community banks and credit unions can use to compete and capture these switchers -- and their billions in deposits.
"Bank Transfer Day was a bust, but FIs of all sizes can learn from it," said Mark Schwanhausser, Senior Analyst, Multichannel Financial Services at Javelin. "Our Bankographic Benchmark(TM) research shows that banks are still in danger of losing customers to FIs that can better respond to their needs, especially in the areas of mobile banking and self-service technology. With $675 billion of deposits and $92 million in fee revenue at play, smaller banks and credit unions really have the opportunity to win new customers."
"Ultimately, consumers are driven by convenience more than fees and protests," said Jim Van Dyke, President, Javelin. "Giant banks will need to drive home their messaging around convenience, mobile banking, and other services that smaller banks don't -- or can't -- offer. Smaller banks can play to their strengths of lower fees, convenience, and customer service, but they will need to beef up their mobile banking and mobile deposit offerings. Our report will show FIs how to re-engineer their product lines and customer acquisition and retention strategies to take advantage of these billions of dollars in deposits that are up for grabs."
Javelin's Bank Switching in 2012: Giant Banks Remain Highly Vulnerable as Consumers Weigh Fees and Convenience and Fees report assesses the prevailing attitudes of consumers toward staying with or leaving their primary FIs. The 31-page report is based on three online surveys of 4,800 to 5,000 consumers each and prescribes the specific strategies that FIs of all sizes can use to compete for consumers likely to switch.
More than half of recent switchers are under 35 years of age and use mobile technologies (smartphones and tablets) frequently. Mobile banking has emerged as a compelling factor for switchers, as they more than twice as likely as all consumers to use mobile banking.