Interpreting the Needs of Mid-Size Bank Customers to Increase Retention

Mar 12, 2021

Ashlie Ossege
LinkedIn

Research study explains how to increase bank customer retentionFor the first time ever, the Big Four U.S. banking institutions—JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo—saw their combined assets exceed $10 trillion, which represents more than half the U.S. total. Mid-size banks face increasing competition from these mega banks that have been investing for over a decade in fintech solutions such as payments platforms, mobile banking, investment apps and automation of financial services and processes.

To remain competitive, mid-size banks must dig deeply into their customers’ needs. And they need to do so with some degree of urgency. Findings from our new Vya Mid-Size Bank Customer Retention Study indicate nearly one-third (31%) of mid-size bank customers are open or actively looking to switch banks.

For those banks looking to protect and grow market share, this study shines a light on the customer segments that are most at risk of attrition, the specific needs of each at-risk segment, along with guidance for retention strategies.

Why Customers Switch Banks

Determining which customers are most at risk of switching enables a bank to take steps to retain them. To figure out who is at risk, it’s helpful to understand why customers switch banks. So, the Vya research team analyzed responses to its mid-size bank customer survey and identified three key drivers that impact a customer’s desire to switch banks:

1. Recent life events: customers who experienced particular life events are among those who are more likely to consider switching banks, compared with those who have not experienced a major life event in the past year.
2. Time with bank: survey findings pinpoint a specific phase of a customer’s relationship with their bank when they are most at risk of switching.
3. Customer satisfaction: 23% of customers who are dissatisfied with their bank are actively looking to switch.

By examining these attrition drivers, banks can better understand their customers’ needs, and address them with the right mix of products, services and engagement strategies to successfully retain them.

Define & Address Innovation

New markets and platforms have emerged that are beginning to steal market share from mid-size banks. Innovation has become essential to survival. One of the key takeaways of the study is that customers want their banks to be innovative.

Banks need to find a way to interpret what “innovative” means for their customers, because what your bank thinks is innovative may not be what your customers have in mind. In addition, your bank’s idea of innovation may not be in line with where new technology is going. The Vya study explores examples of innovation that are redefining banking today and for the future.

Get the Study

The Vya Mid-Size Bank Customer Retention Study validates foundational knowledge that customer satisfaction and customer retention are strongly related. As either of these elements increases, customer lifetime value increases, through loyalty and increased account values. Download the full report for research-based recommendations for successfully targeting and executing your retention marketing initiatives.

 

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Tags: bank marketing, customer retention, market research, customer satisfaction

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