Banks that led and lagged in deploying digital offerings witnessed significant differences in defection rates.
Call it switching, defection, or repudiation—it makes no difference. As life begins to return to normal for millions of people across the US, businesses, too, are ready to resume in-person relations with bank accountants, attorneys and consultants. Just not the ones they had before Covid-19.
According to new research by consultancy Coalition Greenwich, a division of Crisil, a record number of small and midsize companies in the US are planning to change their primary bank due to the inadequate level of support they received during the crisis. The most common complaints are related to delayed responses and breakdowns in the Paycheck Protection Program loan application process, especially in the early days of the pandemic. Of the businesses polled, 17% responded that they were “very likely” to switch banks, 3% were “likely” and 11% were “somewhat likely” to switch. The rates are two to three times higher than normal and suggest an unprecedented level of turnover that could put billions of dollars in commercial bank balances and fees in play, the study noted.
Rising customer dissatisfaction isn’t just a US trend. Whether for the lack of support, the difficulty of face-to-face meetings or the practicality of new technologies, things are in flux everywhere. Data from management advisory Bain & Company’s NPS 2020 survey, published in mid-January, showed that consumers turned increasingly to digital channels for banking during the pandemic, including purchasing financial products from providers other than their traditional lender. With variations among the 11 countries surveyed, between 25% and 51% of all product purchases went to institutions that were not the respondent’s primary bank, especially on high-margin products such as loans, credit cards and investments, Bain said. The banks that led and lagged in deploying digital offerings witnessed significant differences in defection rates.
Still, face-to-face banking interactions aren’t going away anytime soon, Coalition Greenwich says. Despite the recent “Zoom boom,” it cautions that banks should avoid relying too heavily on seemingly easy and cost-effective video meetings to retain customers and attract new ones. Although a mix of traditional and digital channels is necessary, nearly two-thirds (63%) of the businesses that Coalition Greenwich surveyed indicated that they look to resume in-person meetings for their banking needs.
