Disgruntled consumers are increasingly voting with their feet and switching banks. Recent findings from Ernst & Young’s consumer banking survey for 2012 has found that South African bank consumer attrition had increased from 34% to 39% over the past year.
Bank charges and higher fees were cited as the main reasons for leaving. Bank fees were increased in 2012 to recoup a loss in interest income.
When asked how easy it is to switch accounts Gary Palmer, CEO of Paragon Lending Solutions, said: “It depends. If it’s transactional banking it is relatively easy as banks are very competitive. In terms of changing lender it is also getting easier.”
Christine Burrows, corporate communications manager, of FNB said that the bank had opened 1.3 million new accounts for the 2011/2012 financial year. “It’s relatively easy to change your account to FNB. For us, switching has become an acquisition tool. We have a whole team to facilitate people switching over to us. People can also do it online. All they need to do is email us proof of residence and a copy of their ID book. Consumers can get approved within 24 hours and their temporary cards are delivered in a matter of days.”
Palmer said the main reason people were looking into switching was because of they were being charged higher fees by banks. “Banks are charging more transactional costs and people are getting frustrated. Service is an issue too.”
Palmer added that before, during the boom times when banks were more generous with their lending criteria, people tended to remain loyal to their bank. However, things have changed now, believes Palmer. “Banks are making more money from non-interest income and people have become more open-minded now that banks have tightened up [their lending criteria] and charging more.”