Credit Unions vs. Banks: Dueling Headlines Part III

Bank Customer Switching Rates Rise Again, Fueled by Issues with Fees and Poor Service

“Credit Unions Get More Business from Unhappy Bank Customers”

According to the J.D. Power and Associates 2012 U.S. Bank Customer Switching and Acquisition Study, the immediate result of the 4Q11 “Bank Switching Day” initiative was a 2.2 percentage point increase in acquisition of new customers by credit unions and small banks to an average of 10.3% in 2012 from 8.1% in 2011. Among big banks, regional banks and midsize banks, switching rates average between 10.0 and 11.3%, while the defection rate for small banks and credit unions averages only 0.9%.

According to the study, fees are the main reason people look for a new institution and, among big and large regional banks, a full one-third of customers have cited fees as the primary incentive to look elsewhere. "When banks announce the implementation of new fees, public reaction can be quite volatile and result in customers voting with their feet," said Michael Beird, director of the banking services practice at J.D. Power.

Score one for the credit unions, right? Not so fast. In our next post in the Dueling Headlines series, we’ll take a look at how big banks defend their territory and strike back with an interesting article developed by graduate students at Northwestern University. Go Wildcats!