AUSTIN, Texas—A new study shows the majority of consumers prefer to bank locally at a community FI, but not many are willing to switch due to concerns over limited products and services.
BancVue’s 2015 Consumer Banking Insights Study revealed that if all things were equal, two out of three U.S. adults (66%) would rather bank at a community bank or credit union than one of the big national banks, yet only 23% of consumers who are not currently banking at a community bank or credit union say they are at least somewhat likely to switch this year.
The study found that a lack of products (11%) and awareness (11%) are two reasons consumers cite for not using a community-based institution as their primary institution.
The report was conducted on behalf of BancVue on nearly 300 community financial institutions (CFI) offering BancVue’s Kasasa brand of checking accounts and conducted online by Harris Poll in January 2015 among more than 1,000 U.S. adults (ages 18 and up).
According to the study, for 71% of U.S. adults, features like free checking, ATM fee refunds and access to the latest banking products are more important when it comes to choosing a bank than the banking institution that provides them. Fully 31% of big bank customers said they want to use a local community bank or credit union but feel that those institutions lack the products they need.
Lack of awareness is also a hurdle. For example, 34% of consumers who don't have an account with a CFI said they don't use a local community bank or credit union because they haven't thought about it (30%) or are unaware of their options (11%), suggesting a major need for stronger outreach and marketing efforts on the part of CFIs.
"The study's results make it clear that, for community financial institutions, stronger marketing efforts and better products are the key to growth," said Gabe Krajicek, BancVue's CEO. "If community banks and credit unions offer consumers the innovative services they want, they'll switch. It's as simple as that."
Lack of awareness is an even bigger factor when it comes to Millennials (18 to 34 year olds), the study shows. Millennials who don't have an account with a CFI are more than twice as likely to say they don't use a local CFI because they are unaware of their options (18%), than 35-54 year olds (8%) and adults 55 and up (7%).
When it comes to products, the study shows that 38% of Millennials say they want to use a local community bank or credit union but are worried those institutions don't offer the products they need, such as free checking, rewards checking, loan products or financial management tools.