Big banks are realizing they may actually have to pay attention to customers to keep them.
An unprecedented number of people dumped billion-dollar institutions for smaller banks in 2011, a new report from Javelin Strategy and Research shows. The big switch came as anti-bank rage swelled, driven by the Occupy movement, Bank Transfer Day -- and the $5 monthly debit card fee that Bank of America abandoned last fall after a storm of outrage.
"Banks have to start serving clients and really serve them, rather than serving themselves," Citigroup CEO Vikram Pandit said in a Bloomberg interview in Davos, Switzerland, on Thursday.
Of the 5.6 million people who switched banking institutions from September to December, 11 percent said they cut ties with their big bank because they “wanted to move to a credit union or community bank” and were fed up with fees, according to a survey analysis by Javelin, a financial research firm. In previous quarters, the number of adults who expressed that sentiment was so small the research company couldn't make a reliable comparison.
The final data from 2011 showed that more people stayed put than moved. But of those who moved, "it was a surge" from big institutions to smaller ones, said Jim Van Dyke, founder of Javelin.
Big banks are now trying to win back good will -- and customer revenue.
For Chase, that means focusing on higher net-worth clients, a spokesman told The Huffington Post. Bank of America executives explained in the latest earnings call with analysts that it is closing branches to focus on mobile phone and tablet services.
Large regional banks are increasingly bundling services -- like savings, checking and borrowing -- and adding incentives to more deeply embed customers. Some are offering Groupon-like deals. For example, Bank of America is starting to test BankAmeriDeals, bank-branded coupons generated from a customer’s behavior. Citibank is putting renewed emphasis on credit cards.
It's unclear if the efforts will work. Van Dyke pointed out that there were 22 million Google hits on the search term "Bank Transfer Day," but only 610,000 customers actually moved accounts in the last quarter, when the grassroots movement took hold.
"If you could create another wave of the 22 million online posts, you would get a similar level of movement" again," said Van Dyke.