Editor's note: This article appeared in the September 27, 2010, edition of Quirk's e-newsletter.
Many consumers continue to be wary of larger banks, citing fees and distrust. Not surprisingly, only 36 percent of big bank customers trust their bank, compared to 57 percent of credit union customers, according to a study from Chicago research company Mintel. Despite that fact, however, 48 percent of those surveyed have their primary checking account at a large national institution.
"Research shows that people really do want a relationship with their banking institution, one based on openness and fairness," says Susan Menke, vice president, behavioral economist, at Mintel Comperemedia. "But people are banking at larger banks primarily for two reasons - convenience and rewards."
Ten percent of participants have switched their primary bank account to a credit union in the past year. Meanwhile, almost 60 percent of respondents agreed that "trust in a brand is more important than price." In addition, consumers described trust in a financial brand in very similar ways to trust in personal relationships, with more than 75 percent placing "honesty" and "respect" at the top of their list of 12 attributes for both.
There has been a tremendous amount of discussion in the industry about how Regulation E (regarding electronic funds transfers) will impact the profitability of banks, as they are more constrained in their ability to charge overdraft fees. "Most banks would like to reinstate annual fees on checking accounts and debit cards to make up the difference," says Menke. "But banks, particularly the large ones, will be met with substantial resistance from their customers."
However, research shows that people would feel less resentful about paying fees if larger banks made a greater effort to do more relationship marketing with their customers.