Brand Loyalty: Americans Hold Same Checking Account for 19+ Years on Average
- Americans tend to maintain bank accounts over long periods
- Depositers feel it's a "hassle" to switch accounts
- There are steps financial instituations can take to attract depositers
Brand loyalty -- where individuals or business continue to purchase products or services from a specific company or professional in spite of competitors offering a similar product or service -- is a huge factor for banks. How much, you ask? Well, according to a recent Bankrate survey, the average American has held their checking account for 19 years and their savings account for 17 years.
When asked the primary reason cited for this longevity, 43% of checking account holders gave responses that valued the convenience of staying put -- it's the account they've always had, the locations are easy to reach, or it would just be too much hassle to switch.
The Bankrate survey breaks it down as follows:
The most important factor for not switching banks: lack of fees. According to the article, 68% of respondents did not pay any checking fees each month, including monthly service fees, overdraft fees, and ATM fees.
Should Individuals Switch Banks?
Interestingly, the article goes into reasons individuals should evaluate other banks and possibly switch. Ted Rossman, Bankrate senior industry analyst, notes that it’s important for depositors to reevaluate their bank accounts periodically. “Things change over time,” he says.
“You’re probably not wearing the same clothes or driving the same car that you had two decades ago. Your lifestyle changes and your bank accounts should, too. It’s important to shop around every year or two to make sure that you’re getting the best deal.”
Two factors to consider are whether you are paying fees or can receive higher interest rates at another financial institution. However, if you are not paying fees, consider keeping your original account and moving a portion of your money to another financial institutions that may offer higher interest rates.
How Financial Institutions Can Keep, and ATTRACT, New Customers
We all know that financial institutions are in competition with one another for deposits. Aside from offering no fees, there are other factors that play huge roles, including:
- High level of customer service
- Convenient branch and ATM locations
- Reputation
- Online or mobile tools
Checks are a major factor as well, as many individuals enjoy having this payment choice. They have easy deposit options, and if a check is stolen, the bank can stop the transaction before losses are taken. Their reputation only improves as individuals feel their account is secure.
While the media likes to downplay the role of checks, FIs know that enabling their accounts to utilize checks brings an extra incentive to KEEP and GAIN new customers. That's why, instead of eliminating a very popular payment option, banks need to invest in automating check processing with AI, along with adding new technologies to secure the payment channel.