Small and midsize businesses are increasingly frustrated with the quality of service they’re receiving from their banks, which are struggling with the effects of high employee turnover.
Among business clients that recently switched banks, 44% said that a primary reason was dissatisfaction with an employee assigned to their accounts, according to a survey conducted in May and June by Coalition Greenwich, a benchmarking provider that is part of S&P Global. That figure was up from 40% in September 2020 and from 43% in January 2022.
Another cause for concern within the industry: Some 26% of the firms that switched to a new bank pointed to the previous bank’s lack of knowledge about their business as a primary reason — up from 17% less than two years ago.
Banks knowing their clients’ needs “well enough to be proactive in providing advice” is proving key to maintaining their business, said Chris McDonnell, Coalition Greenwich’s head of digital benchmarking.
High turnover in a tight job market means that departing bank staffers may bring their client relationships with them, McDonnell said. Rising interest rates have also created an opening for some banks to offer better rates to attract new clients.
“Changes in the marketplace have created a lot of new opportunities,” McDonnell said in an interview. “However, that also means a lot of customers now have new account coverage.”
The survey findings about the effects of employee churn come as banks are paying higher salaries to combat staff turnover.
Last year, job openings in the U.S. financial services sector reached its highest level in more than a decade, according to data from the Department of Labor. Vacancies spiked 42% between January and May 2022 compared with the same period last year.
“It stands to reason that the person who’s filling the empty seat is probably more expensive than the person who used to be there, or more junior than who used to be there,” said Andy Schmidt, global industry lead for banking at the business consulting firm CGI.
More than three-quarters of the companies surveyed by Coalition Greenwich said they are open to embracing digital self-services, such as onboarding information and simple loan applications. Online self-service was the most important factor that business clients cited when weighing a bank’s digital offering.
Easy-to-use technology can help improve client satisfaction by “taking the tedium out of some of the day-to-day work that bank staff has to deal with,” Schmidt said.
Coalition Greenwich surveyed 568 firms, including both companies with between $1 million and $10 million of annual revenue and those with between $10 million and $500 million of annual revenue.
The findings indicate that in-person visits, which fell out of favor during the earlier stages of the pandemic, have regained popularity. Some 54% of companies said that in-person visits are the best way to earn business, up from 34% in September 2020. Only 9% of respondents said that video calls were the best approach.
During the pandemic, banks tended to “overserve their clients because it was a tense time,” McDonnell said. Now, while clients may have raised their expectations for contact with their banker, he added, banks have “regressed back to the mean.”
An aging workforce will likely force banks to reconsider the employees they recruit, especially for executive roles.
Relationships aren’t everything. Some 48% of the companies that switched banks identified pricing as the primary reason, according to the survey.
Still, 50% of the survey respondents said that advisory services from their banks lacked “proactive outreach” and had “limited understanding of the business.”
Schmidt, the CGI consultant, said the findings underscore the value of experienced corporate bankers. “A gifted relationship manager is worth their weight in gold,” he said.
