Why People Switch?

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About two months ago, I changed the tagline on this blog. Thanks a lot for noticing [sarcasm].

Google it. It’s a line from a Grateful Dead song, but it perfectly fits the tone and content of this blog — uncovering and dispelling the delusions that many people have about marketing and financial services. 

One of the delusions that needs to be dispelled is why people switch banks. In a recent Bank Innovation TV clip, a claim is made that three out of four people would leave their banks if the bank didn’t offer remote deposit capture (mobile RDC to be more precise, although I didn’t really know there was a difference).  

I don’t know the source of that statistic, but whoever made it public should be forced to debate Joe Biden (that’s a pretty painful punishment, no?).

Aite Group surveyed consumers earlier this year about their financial lives — about 10% switched banks last year. So right off the bat, the idea that 75% of consumers would switch banks for any reason is preposterous.

The predominant reason why people switched in 2011 can be attributed to one thing: Fees. Seven in ten of the people who did switch, did so because their old bank started charging fees, either for the account or for using a debit card.

As important as customer service is, just four in ten cited poor service at their old FI, or superior service at their new FI.

How many people switched because their old bank didn’t offer mobile RDC? I don’t know, because I didn’t ask.

But I did ask if they left because their prior bank didn’t offer mobile banking. Six percent of switchers cited the lack of mobile banking as a reason for switching.  And every one of them also cited other reasons — fees being the most common one.

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Bottom line: I’m not trying to disparage RDC. It’s an important tool to attract younger consumers to your financial institution. But the likelihood that three of four of your customers will leave you if you don’t offer RDC is about as likely as Joe Biden behaving in a debate and letting his opponent finish a sentence.  

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