The Power of the Switch: Are You Turning Off New Account Holders?

If you’re not obsessing over your switching process, you are overlooking one of the most powerful tools financial institutions can use to improve the success of their acquisition strategy.

Consumers generally view switching accounts as a major hassle to be avoided at all costs. But that deep-seeded inertia isn’t the main reason why banks and credit unions fail to convert. The truth is that many financial institutions simply neglect the switching process.

“When looking to acquire more checking accounts, the typical focus is on product and promotion, often incentivizing consumers with a gift card or some other reward,” explains Jim Dellavilla, Chief Client Officer at Catalyst. “Research shows consumers make no real distinctions between one checking product and another. They are all the same to them.”

Dellavilla says when it comes to making the switch, banks and credit unions need to shift from horn-tooting — “we have a great checking account” — to the customer experience and what are consumers are thinking during the process.

“You have to step back and empathize with what people are going through,” he said.

Research conducted by Catalyst has identified five to six stages when consumers are considering a switch, selecting a new bank or credit union to making a decision and switching their accounts. Consumers that actually make the switch are those express satisfaction at each of these stages.

  1. Considering making a switch
  2. Shopping for a new banking provider
  3. Making the decision
  4. Opening the new account
  5. Switching to the new account (e.g., bill pays, auto pays)
  6. Closing the old account

When someone says they are going to switch banks it’s almost always for one of two reasons: either they have to because they are moving to a new location, or they are dissatisfied with the level of service they have received and are fed up — “Enough already!” Dellavilla says at the point they decide to make a change, they may be feeling apprehensive but are optimistic that a better experience is on the horizon.

“At that moment, the message needs to be about acknowledging and reassuring the issues that the consumer is wrestling with during this sensitive period,” Dellavilla says. “Be clear, and walk them through in detail exactly how that switching process will work.”

“How many consumers go online, do research, find a bank or credit union with what appears to be a great checking product… but then can’t find anything related to the switching process?” Dellavilla continues. “A $100 gift card may be an attractive incentive, but the consumer is worried about the what ifs — ‘What if something goes wrong with my automatic payments?’ — and it just builds from there.”

It’s not hard to understand why some banks and credit unions are hesitant to commit to setting high expectations for a smooth, intuitive, seamless experience — one that involve so many different departments and channels. After all, a consistent experience is something everyone in the banking industry strive for, but most struggle delivering.

“Consumers want you to make a commitment and promise them that they don’t have to worry,” stresses Dellavilla. “You need to empathize with them. Let them know you understand switching is a tough decision and that you will get you them through it as painlessly as possible.”

Keep in mind: many consumers opened their current checking account right out of school, and it’s now 10-15 years later. “It’s an uncomfortable experience for most people. It’s like buying a house, many don’t buy a home without a realtor or expert because they don’t aren’t familiar with all the ins and outs — they have no real prior experience or frame of reference. What they don’t know scares them. So they are looking for reassurance, understanding and a clear roadmap on what to expect at each and every step along the way.”

“Consumers have conditioned themselves to do research,” observes Dellavilla. “How many are ruling out your bank or credit union as an option because these switching details are never addressed on your website? You’ve already lost them without even being aware of it.”

That’s why it’s so critical to include details about the switching on the website as consumers look at products and services. And yet it’s surprising how few financial institutions paint a concise, step-by-step picture of what the switching process involves. Sure you can find a “switch kit” here and there, but few do a really good job (1) outlining the steps, and (2) reassuring consumers about their fears. Those financial institutions that are able to articulate precisely what they’ll deliver will create a significant competitive advantage.

“The switching process is evolving with new technologies that make it easier to step back and tell the consumer here is what the experience will be like when they start online, over the phone or in person,” Dellavilla says. “‘Here is what we will do — or will not do — at every step.'”

What will happen with their automatic payments and automatic billing arrangements? Who can the consumer be work with to ensure it goes smoothly? Where can they go with any questions, or if they need personalized assistance if something goes wrong? Dellavilla says its best to let consumers be able to pick and choose the level of engagement that works for them.

Once the switch is completed, consumers often find themselves wondering, “Did I make a good decision? I thought it would be okay, but now no one is responding to my questions. Does anyone care?”

“That’s why it’s wise to ensure some sort of proactive, ongoing onboarding as part of the switching process,” Dellavilla explains. “Some messages that reassure a new customer that they are still important.”

“I always tell banks and credit unions that a little empathy goes a long way.”

You can learn more about how to optimize your switching process, overcome customer inertia and iron out the kinks in your onboarding process at The Financial Brand Forum 2017, where Jim Dellavilla will share practical insights and best practices in his session, “Acquisition Strategies: Getting Consumers to Make the Switch.”

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