Something a lot bigger may be about to happen.
That’s the opinion of Steve Bruyn, CEO of Foresight Research who, writing in The Financial Brand, said that its extensive polling had found nearly a doubling of the number of consumers who say they intend to change financial institutions. Now 22% say they are heading to the exit of their present financial institution, per Foresight Research.
Foresight Research elaborated: “We have surveyed almost 11,000 banking customers and credit union members in 44 markets to find out what is really going on in the world of banking from the customer/member’s point of view. Then we added another survey of almost 700 customers and members to find out what the pandemic had changed in the banking industry. We found a hot spot of churn. Churn increased from 12% (over two years) to 22% expected churn in the next year or two.”
Hear the Bruyn podcast here.
The news gets sweeter still: “Of the people who intend to leave their financial institution almost 3 out of 4 are Gen Z or Millennials – the very block of business that drives the future of your financial institution,” said Foresight Research.
Foresight Research added: “So, what drove the high churn? Even though satisfaction declined greatly (except at credit unions) that was not the culprit. Customers and members were generally empathetic, likely thinking ‘we are all in this together’. It was all about financial issues like interest rates and fees. The switchers while forgiving also are looking to reduce cost or increase interest on items like money market accounts, CDs, etc.”
This makes sense. The economy is the worst it has been since the Great Depression. Millions of us are unemployed and millions more are underemployed (working fewer hours). It’s tough to balance the household budget when less money is coming in so a shrewd step is to slash unnecessary outgo.
Bank fees are prime to be trimmed. And that is a potential bonanza for credit unions.
Ask yourself this: where can credit unions beat banks, consistently? The answer is and has long been on pricing of everything, from account fees to NSF fees and loan interest rates. Credit unions are member owned, they have no shareholders who demand dividends. Most have unpaid boards of directors. Most pay their employees fairly but rarely lavishly – and here’s a CNN round up of bank c-suite compensation and note that the CEO of Bank of America had total compensation of $24.8 million but he was by no means the highest paid in the group.
Big salaries, big dividends to shareholders, and bloated, inefficient branch networks add up to huge expenses on the books and that means customers have to pay through the nose for the privilege of having a bank account.
Listen up here.
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