Bad Branch Experience Drives More FI Switches Than Fraud

Almost one in five consumers experienced fraudulent bank activity in 2017, but poor branch service and poor branch cleanliness were bigger reasons consumers switch financial institutions, according to a new survey from video technology firm March Networks and market research company Ipsos. Certain technology strategies could help credit unions battle these issues and keep members loyal, one industry pro noted.

The survey found that fraudulent bank account activity hit 17% of consumers in 2017, up from 15% in 2016. About two-thirds of the time, consumers noticed the activity before their credit unions or financial institutions did. However, just 9% of respondents said they switched financial institutions in response to fraud during the past year.

One in five respondents, on the other hand, switched financial institutions in the past year due to poor branch service, and 70% said they would consider switching financial institutions if their local branches did not appear clean and tidy. For consumers in households with children, that number was 77%.

In addition, almost half (46%) said waiting more than five minutes for service at a branch was unreasonable.

“Consumers today are engaging digitally with their financial institutions more often, but are also frequently turning to in-person services, and have high expectations when it comes to service and security,” March Networks President and CEO Peter Strom said. “Understanding consumer perceptions and how they influence where consumers choose to bank is important for all financial institutions — especially when it comes to strategic planning and the dramatic transformation many institutions are currently undertaking to increase their competitive position.”

The survey data also suggested that consumers penalize credit unions and other financial institutions over ATM site security. Half the respondents said they abandoned at least one ATM transaction in 2017 because someone was loitering nearby.

The study results highlight how strategic uses of technology can encourage member loyalty, according to industry consultant Richard Crone.

For example, most consumers discover fraud on their own — often via alerts and notifications from a mobile app. Credit unions that offer robust technology tools in this area could have an advantage.

“The branch doesn’t discover this; the branch doesn’t inform them of this. It’s the alerts and notifications. So empowering the consumer with a great mobile experience is key there,” he told CU Times.

Cardless technology can help mitigate ATM security issues, he added.

“If people need cash, they’re going to figure out to get it. Maybe not at that ATM, but another. What we’re seeing is that they’re using mobile cardless cash access to get around that,” Crone explained. “You can prestage the withdrawal all in the privacy of your own phone and then simply touch a button, get the cash and reduce the time and the risk of getting cash.”

Technology could also improve in-person branch operations, especially in managing wait times.

“Our data shows that the biggest way to address this issue is to let customers order ahead like you do for Five Guys or Panera or Starbucks,” he said. “You’ll lose a customer for an unreasonable branch experience, but they’re not integrating the branch with the mobile app. The best way to do that is with a scheduling capability.”

“That’s how you make your branch network more valuable — integrating it with the omnichannel experience through the app. And certainly it does that,” he said.