Banks often pull out all the stops to attract retailers as customers, but that doesn't mean they do such a great job of keeping them.
According to a survey of retailers released Tuesday by Fifth Third Bank and the Association of Financial Professionals, 80% of retailers ended banking relationships in the last 18 months while 90% began new ones.
The price of services — not access to credit — was often the determining factor. Three-fourths of those that severed ties with banks said they did so to control costs, while more than half of those that switched to new banks said they found better deals elsewhere.
Only 15% of those that left banks and 24% of those that began new ones cited access to credit among their reasons.
The survey polled finance professionals at 111 retailers about their relationships with their banks. The respondents represented companies ranging from less than $50 million of annual revenues to above $20 billion.
The desire to expand, particularly internationally, is another reason why some retailers are switching banks. Forty percent of those that began new banking relationships did so because their new banks could better handle their expansion overseas.
Not clear at this point is how provisions of the Dodd-Frank Act — including changes in interchange fees and interest on demand deposits — will affect banking relationships. Two percent of respondents said that the changes will affect the way they manage banking relationships, but most — 77% — said it's too soon to tell. The remaining 21% said the changes would definitely not affect their relationships.
