May 20, 2009

While banks are worried about sliding profits and rising loan losses amid the hard-hitting recession, a new problem has emerged: Once-loyal customers are packing their bags and heading across town.In today’s topsy-turvy environment, only 35 percent of bank customers say they are highly committed to a retail bank in 2009, compared to 41 percent two years earlier, according to J.D. Power & Associates’ Retail Banking Study.Banks’ deteriorating brand image amid the financial crisis and more customers encountering unhappy experiences are the two main reasons why customers are hitting the road, according to the survey.

On average, loyal customers often use more products, give more referrals and are much less likely to switch to another bank, compared with customers who have lower commitment levels, the survey said.“Customers reporting the lowest levels of commitment in 2009 happen to be those with deposit balances that are 15 percent higher than average,” said Michael Beird, director of the banking practice at J.D. Power and Associates. “With this in mind, it is crucial that banks take steps to address this steady decline in customer commitment.”