Everyone who’s been watching TV or reading the news lately knows that banks have certainly had their fair share of challenges lately. But what’s been interesting to watch is how those challenges and the fall out from big bank failures and the economic crisis have impacted bank and credit union customer loyalty and engagement levels.
In a new report called the “National Benchmarking/Pulse of America report for Banks and Credit Unions” which was put together by Allegiance, 600 consumers per quarter were asked questions about their “primary” bank or credit union (i.e. the financial institution that they use for everyday purchases) between January-June 2009 (about 1200 responses). What we found was:
- Customer/member expectations of banks and credit unions have shifted away from the more traditional roles of industry leader, guardian and protector of customer/member finances. As a result, two items increased in their impact on customer/member engagement: 1) The perception that doing business with one’s bank or credit union saves customers/members time and money, and 2) Feeling trust in the financial advice customers/members get from their bank and credit union.
- Credit unions continue to have much higher member/customer engagement levels than banks, but the gap is narrowing. Customers’ engagement with their banks stayed about the same with roughly 30% engaged customers from Q1 to Q2. Although credit unions continue to have much higher member/customer engagement than banks, credit unions saw a significant drop in customer engagement from 57% to 49% between January and June 2009. [The 8% drop in credit union engagement is the sharpest drop Allegiance has seen in credit union member engagement since the Allegiance National Benchmarking/Pulse of America survey began in October 2007.] In addition, the percentage of disengaged credit union members rose from 4% to 8%, most likely due to credit unions being forced to raise rates on credit cards and/or introduce variable rates.
- Engagement levels among older customers have fallen. Engagement stayed roughly the same (rose on average by 5%) for banking and credit union customers/members age 54 and younger. However, customers 55 and older saw a 10% drop on average in engagement. (i.e. The push to engage younger customers through social networking may be leaving older customers/members disengaged. Therefore, banks and credit unions should not and need not abandon the practices that have grown their base of loyal, older customers.)
- Both banks and credit unions appear to be focusing their customer/member engagement resources on the most profitable demographics. While engagement fell by 8% for customers with incomes of $50,000 or less, engagement rose by 3% for customers with incomes of $50,000-$150,000.
- Banks and credit unions that had a multi-state and/or international presence experienced a huge 12% drop in customer/member engagement between Q2 2008 and Q2 2009, whereas banks and credit unions that only operated on a local or statewide level saw little change in their customer/member engagement levels during that same period.
To read about these and other findings, download the report at: http://www.allegiance.com/resources/papers/poa-aug09-report.php
Kimberly Mathie, MarComm Manager, Allegiance
