Banks are in an unprecedented era of intense competition for customers. Barriers to switching primary banks are lower than ever for both consumers and businesses. Customers are also constantly bombarded with offers from competitors through online, mail, and TV. As the battle for account holders’ dollars and attention heats up, it’s critical for banks to understand what they can do to prevent attrition.

To understand what drives customers to switch, CCG Catalyst surveyed 200 banking customers this summer who recently switched their banking relationship. While previous studies have demonstrated that customers often switch because of life events like moving to a new location or getting a new job.[i] Such instances are typically outside of a bank’s control. However, a significant number also switch because of dissatisfaction with their current banking provider. Our survey set out to delve deeper into what factors cause such high levels of dissatisfaction, and what banks can do to mitigate them. The survey’s respondents were nearly evenly split between those who had recently switched primary banks in the past year or those who were planning to do so. They were also split nearly evenly between retail customers and business customers.

Six key themes emerged from the survey responses covering the major drivers that lead unhappy customers to leave their primary bank for another. Many of the frustrations reported stem from factors that are under banks’ control, including high or hidden fees, inconvenient branch hours and locations, poor customer service, or poor online or mobile experiences.

The most common theme cited by 40% of respondents was dissatisfaction with their banks’ products and services. This theme included issues tied to fees and interest rates, as well as limitations on products and services, such as slow check clearing or checking account limits.

Nearly a quarter (23%) of the respondents said they were frustrated with the experience banks offered through their service channels. Those frustrations included poor online and mobile banking experiences, and inconvenient branch locations and hours. For reference, 65% of the respondents said they use online and mobile banking, while only 45% said they frequently visit a branch location.

Among the other major themes, 17% said they had a poor experience, such as a sub-par interaction with a staff member. Another 14% cited factors related to customer attitudes, such as reputation issues and mistrust of their banking provider. Finally, 3% said they were drawn away by an offer from a competing financial institution, and 1% switched because of fears over being hacked or having their financial information stolen.

Additionally, retail consumers were more likely to cite poor experiences compared to business customers, who were more likely to cite issues related to channels or attitudes about their bank’s trustworthiness. Interestingly, nearly the identical share of retail (28%) and business (27%) customers felt they had no relationship with their bank, and were treated like just another number. A slightly higher share of retail customers (46%) than business customers (43%) said that they had a relationship with a personal banker or that branch associates knew them by name.

Respondents were leaving all types of financial institutions, but the majority of our respondents (55%) were leaving one of the big four national banks: Chase, Bank of America, Wells Fargo, or Citi. These banks offer a high degree of self-service products, which can make customers feel more distant from their bank. We found that the more frequently customers of these big banks used mobile or online channels, the more likely they were to say they felt like just a number with no real relationship to their financial services provider.

Nearly half (48%) of the customers who left one of the big national banks joined another national bank, likely because of these institutions’ widespread branch networks that provide convenient proximity, and their high investments in digital channels to provide premium customer experiences. Additionally, 26% left one of the big four banks for a regional or community bank, and 12% joined a credit union. Of the overall respondents, 37% were leaving a regional or community bank, and 8.5% were leaving a credit union.

What can banks do to keep their customers in the current competitive environment? When asked what they expect from their new bank, 69% of the respondents said better service, 57% said no fees, and 46% said no increase in fees. Additionally, 41% wanted better online or mobile experiences, and 38% wanted a broader range of products and services. Simply put, banking customers want better service, better experiences, and more choices, with lower fees. They also want consistency and a nurturing relationship, which were the two most popular responses when we asked customers about their most important needs. Consistently building relationships and providing a high level of services and experiences while keeping fees low will continue to put pressure on banks to find alternative revenue streams that can make up for lower fee revenue.

It also means banks need to invest in truly evaluating their customer experience and understanding their key customer segments. When asked to identify trigger points — situations or events that irritate or delight customers — 30% of respondents cited needs such as convenience, open communication, and great experiences in digital channels. Banks need to know where customers face disruptions in different channels that are creating poor experiences that could drive them away. Another 29% of respondents cited trigger points related to ethics, such as trust, fairness and honesty, clear policies, and clarity around fees. This suggests banks also need to evaluate how business practices, such as lack of transparency in fee structures, might dishearten customers. It should be no surprise that positive customer experiences and a trustworthy reputation go a long way in earning customers’ loyalty. But the growing intensity of competition for account holders means banks will need to invest more and work harder to deliver great experiences and earn customers’ trust than ever before.

[i] http://www.bankmarketingclarity.com/images/files/Bank-Marketing-Clarity-Why-Do-People-Switch-Banks.pdf

Paul Schaus is the President, CEO and Founder of CCG Catalyst. Contact him at PaulSchaus@ccg-catalyst.com or 1-800-439-8710. Follow CCG Catalyst on LinkedIn and Twitter.