Price Still Trumps Mobile Apps When Customers Weigh Switching Banks
Switching banks is hard — it’s not like switching channels.
Lower fees are the main reason customers switch banks, but being young also plays a part. The older you, the more complicated your financial life is likely to be, making switching even more difficult.
In an industry obsessed with netting and keeping younger customers — even if they are currently less valuable than older customers — this could come as unwelcome news.
It arrives via SNL Financial’s new study, published March 23, which asked nearly 5,000 mobile banking customers if they switched their primary bank in the past year, and if so, why.
It turns out one in ten — 11% — did, for the following reasons:
- Lower fees at new bank (34%)
- Poor customer service at current bank (28%)
- I moved (27%)
- Better mobile app experience, a.k.a. paging Ron Shevlin (26%)
- Incentive offer (25%)
- Higher APR (14%)
- No local branches (13%)
- Other (5%)
Within that 5% of “other” answers, “getting divorced” and “getting married” were both mentioned as reasons for switching, as was “Wanted my own account separate from spouse.” We don’t have much insight to offer here — we’re not marriage counselors.
It turns out those making $75,000 or more switched banks more often (13%) than those making less than $75,000 (10%). But more significant, perhaps may be age. Young people age 18 to 25 were 5x as likely to switch as those 67 or older. Here’s the breakdown:
- 18-25 – 19%
- 26-35 – 16%
- 36-47 – 12%
- 48-66 – 6%
- 67+ – 4%
The major limitation of this survey is that SNL has not performed it previously, so there is zero trend data available. This is crucial because we wondered whether mobile tools were becoming more or less important when consumers were considering whether to switch banks. Frankly, we debated this internally and decided that 26% was “high” as a factor. Our logic was: if 25% of a bank’s consumers care enough about a mobile banking app that they would uproot their relationship with their bank, that’s significant.
Interestingly, pricing (“fees” in the survey’s parlance) still outweighs mobile tools in the consumer’s decisioning. If that is not the ultimate legacy of the credit crisis, we don’t know what is.
The upshot of the study is that older bank customers are likely to be loyal. It’s the younger ones who can be persuaded to move — as long as you’re not counting on fees as your main revenue driver.
