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Industry News Mid sized businesses showing decreased customer loyalty in banking 2010-08-04 While they are historically fairly stable relationships, TNS' recent Commercial Banking Momentum Monitor shows that a vast majority of medium-sized businesses are not completely loyal to their current banking provider. However, financial institutions looking to sway customers to switch still have a difficult task ahead of them. The survey found that just 21 percent of mid-sized companies said they don't ever anticipate switching banks - a decline compared with past results. But at the same time, just 7 percent said they were actively looking for a new bank or frequently evaluated their bank's offerings. This means that while 72 percent of accounts are "in play," customer acquisition is not an easy proposition. In terms of their potential reasons for switching, roughly 70 percent said that such a move would only be motivated by failures by their current bank as opposed to offers or incentives offered by other FIs. Companies also cited a number of barriers that might prevent them from switching banks. Ten percent of respondents said that the costs of transition would outweigh any of the potential benefits of the move - particularly with higher-earning firms. Ten percent also said that while there are services they would like their bank to offer, they haven't found a competitor with a better offer. Finally, one-in-five respondents said that their needs were so complex that they didn't think another bank could meet their demands. "The banks that will be best positioned to attract new relationships will be those that are able to respond to unmet and emerging needs with a differentiated solution," said Glenn Staada, vice president of TNS. "Bankers must continuously invest in building relationships with the businesses in the community, even among those extremely satisfied with their current relationships. It is these relationships that will eventually drive consideration once an opportunity presents itself." In terms of selecting their new bank providers, 40 percent said they would rely on their own knowledge of FIs in the area, while roughly one-third said that having a prior relationship with the bank would influence their decision. Less than 30 percent said they would use word-of-mouth advice from colleagues or others. The reduction in loyalty highlights a growing trend that can also be seen in both the retail and small business banking segments. A survey last month by Accenture found that retail banking customers were 63 percent more likely to "shop around" in search of better rates or deals, and a study by the Aite Group earlier this year found that 73 percent of small businesses would consider switching banks. 
Two More Words on Client Retention
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