Customers shy away from switching banks

Customers shy away from switching banks

Fees for checking accounts, debit cards, paper transfers or small withdrawals – in view of the low interest rates, many banks have asked their customers to pay more.

Nevertheless, many consumers are reluctant to switch banks. This is shown by a survey of more than 2,000 bank customers conducted by the management consultancy oliver wyman. However, consumers are increasingly using second banks for consumer loans or construction financing.

The proportion of customers who changed banks within a year has averaged only one to two percent over the past 30 years, says the paper, which is available to the deutsche presse-agentur. In the past five years, this figure has risen significantly to three percent – still a low level. "The traditional financial institutions such as savings banks, volks- and raiffeisenbank, and other branch banks still hold the dominant position in the role of house bank," explained study author tobias dziggel.

Despite the low switching rate, financial institutions can’t feel too secure. The traditional customer, who conducts all his money transactions through his branch bank, is on the decline: more than 60 percent of customers have one or more banking relationships in addition to their traditional bank, as the study shows.

While the house banks are clearly ahead in current accounts, credit cards and insurance, customers are increasingly turning to the competition for construction financing and consumer loans. Price comparisons on the internet make conditions transparent. Competitors are also scratching away at the former monopoly of the house banks in savings products and securities transactions. Even checking accounts are not unchallenged: a good half of customers have a second one, for example at direct banks on the internet.

Younger customers in particular are switching banks. A good one-fifth of all customers between the ages of 18 and 29 had decided on a new institution in the past five years. Young adults over 30 are also less loyal to the house bank. With demographic change, the trend will intensify, consultants believe. In the next five years, a quarter of all customers could change banks.

When customers turn their back on their bank, rising fees are the main motive, according to the study. The main reasons given for switching were prices and new fees (35 percent), followed by more attractive competitive offers (19) and better products and services (18). "Dissatisfaction with conditions is a major motivating factor," said oliver wyman expert benjamin schulz.

Whereas banks used to use free accounts to attract customers, the pressure of poorer day-to-day business has led to a change in thinking. Because many banks suffer from low interest rates. Deutsche-bank board member frank straub says market is normalizing. "Banks everywhere ? Even the direct banks ? Fees for checking accounts," he said recently. Meanwhile, consumer protection has also become stronger: since november, banks must inform customers annually about the total cost of their accounts.

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