Branch Break: Mergers, Resulting Branch Changes, Have Bad Effects On Consumers

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Not surprisingly, a new study has quantified that changes to branches and branch closing stemming from mergers among banks can "have an impact on customer relationships, according to a recent research study by SYNERGISTICS RESEARCH Corp.

The study, "Consumer Branch Monitor 2005," found that one-third of the 2,000 consumers age 18 or older who were interviewed reported that the financial institution they use has merged or been acquired in the past two years. Of these respondents, one-third report that their branch changed in some way as a consequence of a merger or acquisition-a change in appearance, service, location, or a closing. (This translates to one-tenth of all respondents.)

One-in-20 households reported closing accounts as a result of a merger or acquisition that involved their financial institution. More than four-in-ten of those who report that their branch changed or closed as a result of a merger or acquisition say they moved an account as a result.

Effect On Small Business Owners

Furthermore, the study found that small business owners are more likely than non-business owners to have closed accounts as a result of M/A activity. One-fifth of the small business owners who have had relationships with a financial institution that was involved in a merger or acquisition closed accounts as a result of the activity.

"Providers involved in merger or acquisition activity that results in changes to their branches or branch closings should take care to safeguard relationships with customers, particularly small business customers, and make the transition as seamless as possible, said SYNERGISTICS CEO William H. McCracken. "It is significant that one-third of consumers have had experience with their financial institution being involved in consolidation activity in the past two years.

"One-third of those experiencing a merger or acquisition report their branch changed or closed and more than four in ten of those closed an account," McCracken continued. "For many consumers, the branch is the bank. Branch changes or closings can mean lost customer relationships."

For info on the study and other research, www.synergisticsresearch. com.

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