NEW YORK, July 8, 2013 (GLOBE NEWSWIRE) -- Although most (85%) U.S. retail banking consumers say they're satisfied with the relationship they have with their primary bank, and three out of five (59%) believe their primary bank places a high value on their relationship, new research published in The Payments Report suggests there's still significant room for improvement.
The Payments Report found that only 22% of respondents say they hold multiple accounts with their primary bank, while 72% admit to holding products with multiple financial institutions. Among affluent consumers (consumers with investible assets of more than $100,000, excluding any real estate), a mere 10% reported holding multiple accounts with their primary bank.
There are a variety of reasons consumers choose to diversify their banking needs. A significant reason is that shopping around for better rates on loans and deposits is likely to provide better pricing, especially on products like auto loans and mortgages. 54% and 44%, respectively, cited better rates as the reason they use products at a bank other than their primary financial institution). Few consumers see much genuine benefit for maintaining multiple product relationships with the same bank, with only one-third (33%) of all consumers saying their primary bank offers them any additional benefit for doing so.
According to Matt Simester, Managing Director of the Payments Insights practice at ACG, retail banks have powerful incentives at their disposal to increase cross-selling. Preferred customer interest rates on loans and deposits is a cost-effective way to expand the customer relationship. Another powerful incentive, especially for banks that issue credit cards, is special rewards for cardholders. Nearly three-quarters (73%) of more affluent consumers, in particular, said a higher APR on deposits would be influential, while nearly as many (70%) feel the same regarding higher earnings rates on credit card rewards. Mr. Simester adds that in simple terms retail banks can, and should be more innovative in rewarding customers for having multiple products. The cost of such incentives is likely to be less than the cost of acquiring a new customer yet retail banks persist on building product sales strategies rather than customer-centric approaches. The first bank who builds an aggressive rewards strategy for multiple product holdings will have first mover advantage.
About Auriemma Consulting Group
Since 1984, ACG has offered comprehensive management consulting, research, industry roundtable and benchmarking services to the financial services industry. ACG clients include credit card issuers and networks, commercial banks, mortgage lenders, merchants, and industry vendors. With offices in New York and London, ACG offers actionable solutions to help clients make important business decisions to maximize their efficiencies and revenues. For more information, please contact Matt Simester at 212-323-7000 or firstname.lastname@example.org.
CONTACT: Matt Simester 212-323-7000 email@example.com
Source:Auriemma Consulting Group, Inc.