During this pandemic and economic downturn, consumers have turned to their banks for help, and most have been happy with what they’ve found. But for many, financial goals have now changed, and millions may consider switching their primary bank.
To help retail banks chart their course, PwC surveyed 6,000 US consumers between May 27 and June 3, 2020. We asked people about their financial sentiments, their needs and how they prefer to interact with financial institutions. Many told us that they want new kinds of support and interactions—and, more than ever, they’re ready to look elsewhere if their needs aren’t met.
live in a major metro area (population over 1 million)
have an account with more than one financial institution
had their employment affected by COVID-19
have children living at home
A job well done? For many banks, the answer is yes: 71% of the consumers we asked said they’re satisfied with their primary bank’s efforts to alleviate COVID-19’s impact. Twenty percent (including 35% of Gen Z) report an increase in trust in their primary banks since early spring. Banks delighted these consumers through digital offerings and servicing, where 82% and 79%, respectively, say banks met or exceeded expectations. Two thirds (68%) said the same about the branch services they received.
Yet primary banks shouldn’t rest on their laurels: 17% of those we surveyed say their non-primary bank did a better job supporting them during COVID-19. And 40% of those who found better service elsewhere said it was a credit card issuer or direct bank that offered them better support.
Banks’ success in pleasing customers came from top-notch digital offerings and servicing, but the threat from competitors—including non-traditional rivals—is real.
of consumers are considering switching their primary bank in the next six months
of potential switchers (6% of consumers) are looking to move in the next 90 days
1 in 3
potential switchers were not considering switching prior to the onset of COVID-19
During ordinary times, these satisfaction ratings wouldn’t suggest attrition risk—but these aren’t ordinary times. In fact, 14% of the consumers we asked said they’re likely to switch their primary bank in the next six months. And one-third of these say that, prior to COVID-19, they hadn’t been considering a move. Potential switchers are twice as common in areas under stay-at-home orders than in open ones.
Credit unions seem to have the most loyal customers: Only 8% of those we surveyed said they’re planning to switch. Online/direct banks may have the most restless customers, where 26% expressed interest in making a change. Consumers at large traditional and regional banks reported potential attrition rates near the average: 14% and 13%, respectively.
The pandemic hasn’t just created switchers. There are newly-loyal consumers too: 5% said that their primary bank’s COVID-19 response has made them abandon previous plans to switch. Half of these currently bank with a top-four institution. They cited trust, personal communication, community outreach and the stability that comes from size as why they chose to stay.
With so many consumers considering a switch, it’s critical to offer the trust and services that consumers demand.
COVID-19 has primed consumers to be more interested in digital channels than before. Twenty-seven percent of those we asked said the pandemic has made them more likely to use their bank’s website. Twenty-three percent said the same for their bank’s mobile app, and 26% said this about online mobile payment apps. Nearly a quarter (24%) are less likely to use their bank’s branch offices.
Yet many are still as likely as ever to go to branch offices. They cited both activities that can only take place in the branch (such as in-person meetings, check cashing or cash transactions) as well as many that could be done remotely: large deposits, international banking, setting loans, meeting with advisors and changing personal information.
Although consumers are pleased with digital offerings, many continue to visit branches for services that digital can provide. Banks should consider not just prioritizing digital investments, but also better educating consumers on all of their offerings.
Consumers are a little less worried now, relative to our previous survey. Now, 37% expressed worries about income, down from 47%. And 17% of those we asked report no financial worries, up from 11% earlier in the spring.
In particular, many younger consumers are feeling pinched. For consumers under 40 years old, the top concern seems to be saving for an upcoming life event (cited by 55%, including 65% of Gen Z). Over half say they’d like waived ATM fees (63%), waived deposit fees (60%), waived credit card/loan fees (56%), access to low interest loans (55%), reduced minimum payments (53%) and increased credit card limits (51%).
Consumers aged 40 and older are also focused on saving—but here, the top concern (cited by 44%) is a decline in retirement funds. While these consumers appear less in need of support, on average, they also expressed preferences for fee forgiveness, including waived ATM fees (35%) and waived deposit fees (31%).
Many consumers—especially younger ones—are hurting financially. Their top request for support is not loans or credit, but fee forgiveness.
Today, nearly three-fifths (58%) of consumers in our survey said they’re managing their daily and monthly expenses. Before the pandemic, only 43% did. In a sign of this downtown’s uneven impact, there has been both a seven-percentage-point (pp) increase in consumers aiming to opportunistically invest in market sell-offs (to 35%) and a five-pp decline (to 37%) in those planning to increase retirement contributions.
Below these headline numbers are sharp variations in individual consumers’ behavior. The five-pp net decrease in retirement contributions, for example, includes both 15% who said they will increase contributions and 20% who say they will no longer do so. Unfortunately, banks may not be hearing from their consumers about these changes: Only one-fifth said that they talk to their primary bank about their financial goals.
COVID-19 has reset the goals of many consumers, but they may not be discussing this reset with their banks. Banks may wish to consider new ways to listen to consumers and offer advice.
With the primary bank relationship so valuable—a source of both deposit dollars and new product sales—banks will likely want to double down on understanding and meeting their customers’ needs. Many people report being satisfied with their banks’ COVID-19 responses, particularly with digital offerings and servicing. Yet a sizable share said that a non-primary bank still did better and that they’re looking to switch brands. Similarly, while many banks have tried to promote their capabilities, the messages may not be connecting: Many consumers are still not taking full advantage of banks’ digital offers or sharing their changed financial situation and goals with banks.
In theory, many banks have access to data that could give them more insights into what individual users want. Even greater investment in digital services, better communication and targeted support (with many customers eager for fee forgiveness) could strengthen current relationships and win new ones throughout this recovery and beyond.
Principal, FS Digital and Customer-Driven Transformations, PwC US
Greta Lovenheim Capps
Director, Financial Services Analytics, PwC US
Director, Data Analytics, PwC US
Director, Data Analytics, PwC US