Nearly 10% of bank customers switched to another financial institution last year, with a third saying onerous fees prompted the move, a J.D. Power & Associates study found.
The 9.6% who moved their money compared to 8.7% in 2010 and 7.7% in 2009 – an increase the study attributed to a backlash against increased fees, coupled with poor service and unmet customer expectations.
“It is apparent that new or increased fees are the proverbial straws that break the camel’s back,” said Michael Beird, director of Power’s banking services practice.
“More than one-half of all customers who said fees were the main reason to shop for another bank also indicated that their prior bank provided poor service.”
The study, released Monday, concluded that fees have become the main reason customers shopped for a new primary bank. The same survey a year earlier found the most common reason for switching banks was a change in personal circumstances, such as a move.
Revenue at large banks has dropped by billions of dollars as a result of restrictions on credit card, overdraft and debit card practices. The new rules were imposed as part of regulatory changes that followed the industry’s near-meltdown and government bailout.
Attempts to impose new fees have met resistance. When Bank of America and other large banks moved toward charging consumers to make debit card purchases, the ensuing revolt , including a “Bank Transfer Day” in November, sent a wave of customers bolting for smaller banks and credit unions.
Among banks with more than $33 billion in assets, annual switching rates are now running at 10% or more on average, Power said. The defection rate for small banks and credit unions now averages only 0.9%, a significant drop from 8.8% last year, it said.