Tuesday, February 28, 2012

Bank-Changing at a Record Pace

Move Your Money and Bank Transfer Day weren’t the token protests they might have appeared at first. In all, 10 percent of U.S. bank customers changed banks in 2011 according to one survey. From everything I know about the history of banking, that has to be a record. And what makes it especially striking is that it came in a year when residential and job mobility were at historic lows. People often are forced to change banks when they move and change jobs, but that didn’t happen for many people last year. It shows that people consciously decided to change banks, then found the time to follow through.

Most people are extremely reluctant to change banks, so if 10 percent did so, it shows that more than a few banks are doing poorly indeed at meeting their ordinary customers’ expectations. Even more sobering from a banker’s point of view are the indications that this trend is far from over — that indeed, similar numbers of people are changing banks in 2012. Now that people have learned how to change banks, or have seen their friends do it, they are ready to do it again. This will put more pricing pressure on banks, and those that are not ready for it may find themselves slowly squeezed out of the consumer side of the banking world.