WESTLAKE VILLAGE, CA March 1, 2011 /PRNewswire/ According to a survey released March 1 by J.D. Power and Associates, customers are increasingly shopping for and switching to new primary banks.

The 2011 U.S. Retail Bank New Account Study examined the bank shopping and selection process as well as customer satisfaction with the account initiation and on-boarding processes.  Among those surveyed, 8.7% indicated they switched their primary banking institution during the past year to a new provider. In comparison, just 7.7% said the same in the previous annual study. On average, customers said they considered 1.9 banks while shopping—up from an average of 1.6 banks in the earlier report.

"The increased switching rate indicates more consumers are coming into the market, providing more opportunities for banks to acquire new customers," said Rockwell Clancy, vice president of the financial services practice at J.D. Power and Associates. "These customers appear to be more discriminating and diligent when selecting a new bank."

According to Clancy, the most common reason for switching banks is a change in life circumstances, although customers also switch because of fees and rates, unmet expectations and poor service.

For customers evaluating and ultimately selecting a new bank, the most important factors driving their decision are:

• Advertising;
• Branch convenience;
• Products and services;
• Promotional offers; and
• Direct and indirect customer experience (including past personal interactions, recommendations and bank reputation.)

Pricing, however, including fees and interest rates, carried relatively little weight in influencing customer purchase decisions despite recent heavy media coverage of changes to fees for bank accounts and credit cards.

Banks that perform well in acquiring new customers—Chase, PNC Bank and SunTrust Bank, in particular—tend to be aggressive in their advertising and promotions.

"It's undeniable that the 'blunt instruments' of ad spend, branch density, and promotional offers such as gift cards have been effective during the past year in capturing market share," said Clancy.  "The question is whether these provide sustainable competitive advantage, particularly when compared with customer acquisition gains resulting from positive past experiences with a brand and recommendations from friends and family, which are harder to duplicate."

One of the study's most unexpected findings suggests that cross-selling is not a well-implemented strategy at most institutions: Only slightly more than 2 out of every 5 customers (43%) who purchased an additional banking product made that purchase at their primary bank.  For customers who turn to another institution for an additional product, promotional offers such as gift cards carry the most weight in influencing the purchase decision.

"Customers who choose to stay with their current primary bank for additional products are most driven by positive past experience and perceptions that their bank is more focused on customers than on profits," said Clancy.  "Clearly, banks that are not providing a noticeably better experience are more likely to lose the business of indifferent customers who are more easily lured by the next attractive promotional offer to come along."

The 2011 U.S. Retail Bank New Account Study is based on multiple evaluations from 4,791 customers who shopped for a new banking account or new primary financial institution during the past 12 months. The study was fielded in November and December 2010, and includes Bank of America; Bank of the West; BBVA Compass; BB&T; Capital One; Chase; Citibank; Comerica Bank; Fifth Third Bank; Harris National Bank; HSBC; Huntington National Bank; KeyBank; M&I Bank; M&T Bank; PNC Bank; RBS Citizens; Regions Bank; Sovereign Bank; SunTrust Bank; TD Bank; U.S. Bank; Union Bank; and Wells Fargo.