Project Catalyst’s New Study is an Analysis of Bank Mergers Impact on Customers.
Mergers between U.S. banks could hit the highest level in a decade this year, according to some analysts. Which means many customers, often overlooked during the process, could be up for grabs.
When banks undergo a merger and acquisition it is important to pay attention to its impact on accountholders, since customers often respond very emotionally to a bank acquisition.
J.D. Power and Associates says the probability for customers to change banks surges by up to three times after a merger or acquisition. That erosion of 20 to 30% or more signifies a substantial loss.
Therefore, it is essential for banks to manage customer expectations and perceptions during the merger or acquisition process.
Project Catalyst analyzed M&A impact research unveils insights about the banking customer’s attitudes toward the acquired bank. This research reveals:
- The customer relationship with the acquired bank
- Customer actions and concerns about the acquired bank
- How to reassure customers during the acquisition process
When asked what their experience was like when their bank experienced an acquisition, 82% of respondents said it was a good experience. Of the 82%, 47% percent had a very good experience.
More than six out of ten said their primary bank would remain their primary bank until the new financial institution fully takes over. However, 22% of respondents said their current bank would no longer serve as their primary bank.
Respondents’ top concerns included customer service (33%), local bank and or branch-staff job losses (28%), branch closing (25%), and a change in business practices (25%). Their primary worries about products included fee increases (47%), increase or change in fees (43%) and product changes (31%).
Thirty-eight percent of the respondents rated the acquisition experience bank as positive and 35% said there was no disruption to their banking routine. For 15% of respondents it is too soon to tell if the experience of merge was positive or negative. Only 12% found the merger experience negative.
Apprehensions for the banking business involved increases in fees, less cash, and more online and less human interaction.
It is no secret customers expect the worst following a merger announcement. Bank customers may lose their favorite branch but financial institutions stand to lose quite a few customers in the process as well.