Banks, CUs Still Not Seen As Place To Invest

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Despite two years of Wall Street scandals, retail banks and credit unions appear no closer to shifting consumers' investment dollars to the same institutions where they hold their checking and savings accounts.

That's according to a three-city exit poll of bank customers at super-regional and national bank branches conducted by NewGround, a design/build and branding firm for financial institutions.

NewGround's "sidewalk survey" of 178 bank branch customers in New York, St. Louis, and San Francisco shows most results equal to or worse than results from the same poll conducted in 1997 and 2000.

Just 18% of respondents agreed that their primary bank was a good place to purchase investments. That figure is identical to findings from 1997 and two percentage points lower than results in 2000. The number of bank customers who disagreed decreased slightly, from 33% in 1997 to 27% this year, but the number who responded "I don't know" rose from 49% six years ago to 56% in 2003.

'Still Treading Water'

"After spending millions over six years on marketing a broader range of investment services, retail banks are still treading water," said Charlene Stern, senior vice president of strategy, branding, and retail design for NewGround. "In the verbal response section of the survey, one theme that we heard consistently was that investments are just 'not a bank thing. I go to a specialist for that,' they would say. Retail banks have blanketed the public with ads and brochures, and mutual fund controversies unfold that were supposed to drive investors away from Wall Street. Yet consumer opinion of the banking industry has not improved. Actually, when it comes to anything other than checking and savings, customers continue to ignore their primary bank."

When asked if they would make their next financial purchase at their primary bank, 35% of respondents said it was "highly unlikely," 6% said it was "unlikely," and 24% did not know. Of the group that said it was unlikely, one in five (20%) said they would make their next purchase at another bank, 17% said they would go to another company (credit union, brokerage, etc.), and 15% said they would tap an independent broker.

"Banks have clearly made progress in raising customer awareness, but it has not translated into new business in more meaningful categories," said Stern. "If while standing in front of their own bank, two out of every five customers say their next dollar is likely going to a competing financial provider, you have failed. Product awareness is only the critical first step, but if it doesn't result in sales, you don't survive."

As Consumers Turn

When asked if they went to their bank when they needed financial information or help, 46% of bank customers said no and 18% did not know. In addition, responses remained essentially the same for the statement: "Bankers here try hard to understand my needs before they recommend or sell me something." In 2003, 22% of customers disagreed with that statement, and 40% did not know. The number of those who agreed (38%) decreased from 42% in 2000.

"The missing piece of the puzzle is the brand experience-creating future opportunity through differentiation and consistent quality service," said Stern. "More than half of bank customers are either ambivalent or downright against going to their bank for advice or help. Why? Because they think they won't get it. They might get another brochure for another product of the month, but they don't expect to receive personal attention by a knowledgeable representative who cares more about their particular needs than just filling the order. This has translated to an all-time low level of trust in the banking industry."

What People Say They Want

Even though the respondents had been customers at their bank for an average of 13.7 years, almost half (48%) said it would not take a lot for them to move their money out of their primary bank if another bank really treated them well. When asked what advice they would give to banks, the vast majority mentioned improving customer service. Common themes included poor bank employee behavior, "bureaucratic" procedures, and lack of personal attention. One customer simply advised, "Smile a little more."

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