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Industry News Survey finds large percentage of businesses looking to switch banks 2010-08-12 As part of a continuing trend of reduced customer loyalty in banking, a new survey of small and mid-sized businesses finds that many of them are looking to make a change when it comes to their current financial institutions. The study, completed by the financial services firm Greenwich Associates, found that 20 percent of mid-sized companies and 15 percent of small businesses have requested competitive bids for new banks. In addition, another 19 percent of mid-sized businesses and 16 percent of small businesses plan to look for bids within the next year. The study says that rate is double what it was during the second half of 2009, and it shows an even bigger increase when compared with the figures from a year ago - when just 4 percent of those companies said they were looking for a new bank. Greenwich said that roughly 10 percent of companies change banks in an average year. Companies cited a number of specific reasons for the desire to switch banks. The most popular reason - listed by roughly half of respondents as one of their top three reasons - was a desire to reduce the amounts they paid in fees. The other main reasons were poor customer service and an increased need for capital. With mid-sized companies, 37 percent listed the need for credit, while just 23 percent cited customer service. But customer service was a bigger problem among smaller companies. Thirty-three percent of small businesses complained about customer service, while 27 percent desired increased access to capital. "At the start of this year it seemed clear that a good portion of switching activity was being driven by the positive trend of companies looking for new sources of capital to fund their businesses in the face of an economic recovery," the study said. "Although the share of companies looking to switch banks has increased dramatically since then, this activity does not seem to reflect new strength, but rather, increased frustration with current providers." The results of the study are also reinforced by a recent CFO poll of financial executives. The survey, which will be fully released in the magazine's October issue, found that a majority of executives were more likely to switch banks than they were two years ago, and that nearly 25 percent of respondents viewed their banking relationships as "strictly transactional." 
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