cg42 in the News
New Study Projects Top 10 Retail Banks in the U.S. to Lose a Combined $92 Billion in Deposits and $5 Billion in Revenue in the Next Year
Citibank ranks most vulnerable to losing customers, deposits, and revenue
Wilton, CT – July 18, 2013 – Management consultancy cg42 today released the follow-up report to its groundbreaking 2011 study, which ranks the top 10 national retail banks according to the risks associated with their greatest vulnerabilities. Based on a survey of 3,662 real customers, the study uses the Brand Vulnerability Index (BVI) to measure consumer frustrations with each bank.
Among this year’s chief frustrations are broken promises, being nickeled and dimed, and getting hit with unexpected overdraft charges and fees. As a result, 26% of customers expressed that they are frustrated with their primary banks. This translates to a projected $627 billion in customer deposits in jeopardy (“in play”) at the top 10 banks, $92 billion of which is expected to exit in the next year, a mild improvement from the 2011 findings when $675 billion was at risk and projected losses were $185 billion.
Bank of America, the most vulnerable brand in 2011, now ranks as the third most vulnerable, with Citibank taking over as the bank with the highest brand vulnerability, standing to lose the highest percentage of deposits and customers. In the current study, TD Bank has the lowest brand vulnerability score, replacing PNC, the least vulnerable bank in 2011.
“Customers still feel that their financial institutions aren’t serving their best interests and they’re frustrated,” said Stephen Beck, founder and managing partner of cg42. “Comparing the brand vulnerability of big banks from 2011 to today shows that while the industry suffers from many of the same frustrations, institutions that addressed their customers’ concerns significantly improved their competitive position in 2013.”
BVI surveyed four components of brand vulnerability, including: frequency of customer frustrations; customer sharing behavior (for example, disclosure of frustrations on social media); the impact of frustrations on customer behavior; and the uniqueness of those frustrations to a particular bank.
Responses were collected, analyzed, and modeled to produce a ranking of the top 10 retail banks by vulnerability, from most to least:
- Bank of America
- Capital One
- Wells Fargo
- US Bank
Key findings from the study show that:
- 26% of the top 10 retail banks’ customers are vulnerable in 2013. While an improvement from 2011, when 33% of customers were vulnerable, $627 billion in deposits and $34 billion in revenue remain at risk.
- 15% of vulnerable customers are actively looking to switch their primary bank and 11% are very frustrated, but not actively looking to switch.
- 11.4% of Citibank’s customers are expected to defect and move $18 billion in deposits to another institution in the next year, which will need to be offset by new customer acquisition efforts.
- 63% of customers believe that banks merely claim to have consumer interests at heart but in fact only care about their own interests, an improvement from 2011, when 71% believed this to be the case.
- 55% of customers in 2013 are uncomfortable with how large the major banks have become compared with 50% in 2011.
The BVI framework can be applied to other industries to produce similar results. For more information in cg42’s studies, please visit www.cg42.com.
cg42 is a boutique management consulting firm that helps clients effectively create demand through customer-led growth strategies. We are passionate about helping our clients move beyond the rhetoric of marketing today, operating under a model that is based on strong discipline, purpose, and objectivity. Our expert team is comprised of senior professionals with vast industry experience, having successfully worked with major global brands in the financial services, professional services, technology, telecommunications, healthcare, and consumer goods and services sectors. For more information, please visit: www.cg42.com. And remember – Don’t Panic.
Elizabeth Gemdjian, 212.784.5722