The nation's 10 largest retail banks are at risk of losing $185 billion of deposits over the next year as customers will look to move primary accounts to community and regional banks that they perceive as being more consumer friendly.
That's the conclusion of a study released by a Connecticut consulting firm Wednesday that measures the "brand vulnerability" of large financial institutions. Based on surveys of 5,600 bank customers, the study, conducted by the firm cg42, found that half the respondents are uncomfortable with how large some banks have become; 71% believe their banks do not have consumers' interest at heart; and 70% want to spread their relationships out among several banks.
The results of the survey follow a much-publicized grass-roots campaign that urged customers of large banks to move their accounts to smaller banks and credit unions.
Still, even in the face of relentlessly negative publicity in recent years, large banks have had little trouble attracting or retaining deposits. According to recent Federal Deposit Insurance Corp. data, banks with $10 billion of assets or more grew deposits at a far faster clip than their smaller rivals in the one-year period that ended June 30.
But Steve Beck, the founder and managing partner of cg42, said he expects the large banks to begin losing market share because consumers' "frustration is at an all-time high." He cited "nickel-and-dime" fees, a failure to offer competitive rates on deposits, and overdraft policies as consumers' top three frustrations with large institutions.
In the cg42 survey, which was conducted in June, the bank that could see the largest exodus of deposits is Bank of America; the survey found that 10.3% of its customers could defect to other financial institutions over the next 12 months. Citibank is seen to be the No. 2 most vulnerable bank, followed by Wells Fargo, Capital One and JPMorgan Chase. The least vulnerable of the large banks are PNC, SunTrust and U.S. Bank, according to the survey.
