Merger and acquisition activity could be spurring credit union members to take their business elsewhere, according to the results of a new Gallup poll.
Customers tend leave at much higher rates from financial institutions that were acquired (8%) compared with the average annual attrition rate across the industry (5%), Gallup said. The results were based on a survey of 9,219 adults conducted between Sept. 14 and Oct. 25, 2011 and again on June 11 to June 25, 2014.
The loss of members and deposits can be especially devastating if the financial institution already has low customer engagement, Gallup Analytics Principal Researcher Sean Williams noted. If the acquiring institution has higher engagement than the target institution does, the attrition rate is 6%, he said. But if the acquiring financial institution has lower engagement than the target institution, attrition rises to 10% – twice the national average.
"These findings suggest that customers of the target bank quickly learn the customer service experience they can expect from the acquiring bank," Williams noted. "When their experiences with the new bank are worse than what they encountered previously, customers leave in large numbers. However, when their experiences are an improvement from the previous bank, they are not much more likely to leave than the national average across the industry."
Gallup's customer engagement measure is based on the degree to which respondents say their institutions always deliver on what they promise, that they are proud to be the institution's customer and that the institution is the perfect one for people like them.
Williams recommended financial institutions make sure members are fully engaged and take time to learn the engagement level of target institutions. If the targets have higher engagement levels, study and emulate those member experiences that encourage engagement, he said. Williams also recommended communicating with employees and members about merger and acquisition plans early and often to establish clear expectations and increase confidence and loyalty during the transition.
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