There are seemingly endless options for consumers to choose between banks and credit unions throughout the US – so how do consumers know which one is best, and more importantly, which one is best suited to fit their particular needs?

Consumer Reports recently released its ratings of banks and credit unions in the United States. In their article, Choose the Best Bank for You, they addressed the important things to consider when choosing a bank and picking the right services that cater to specific needs of individuals.

The article also addresses one clear issue – how important customer service is to attract and retain consumers.  Banks and credit unions alike are all vying for market share and competing for customers.  In doing this, some have conventional and unconventional methods – some focus on lifestyle and transforming the bank branch experience, while others may focus on the digital and largely transactional business models.

According to the Consumer Reports product review, here’s how financial institutions stack up:

  • Mega banks own about 40 percent of all US commercial bank accounts today. These banks hold the lion’s share of accounts and tend to be on the cutting edge of technology services such as fingerprint log-in to mobile banking services and implementing voice- or face-authentication.   However, many of them tend to score in the bottom fifth of all overall ratings by Consumer Reports.
  • Credit Unions – While credit unions can be somewhat limiting due to eligibility requirements, it was shown that they are winners when it comes to lower fees and higher satisfaction. The report showed that credit union customers on average spend $71 annually on checking account fees vs. the $183 paid by bank customers.
  • Online Banks – The newest of all financial institutions is the online bank – virtually branch free. According to the report, these virtual banks are the winners in overall customer satisfaction with only 11 percent of customers complaining about the service they received. However, if a consumer prefers to meet with a banker or to visit a brick and mortar bank, this isn’t necessarily the best option.
  • Regional and Community Banks – Coming in second for customer satisfaction, with 77 percent of respondents being highly satisfied, are the regional and community banks. While they may not have as many branches or a large network of ATMs, what they do have are call centers that are answered by real people and additionally, these banks help to drive capital in local economies.

So, what does this all mean for financial institutions? It’s clear that today’s consumers are more often than not choosing a financial institution not because it is a nationally known brand or because it is the bank that their parents used, they are choosing it because it best fits them and their lifestyle.  And, it comes down to the service level and experience that financial institutions can provide to specific individuals.

The key take away from this is that despite the popularity of technologies, online conveniences and digital experiences – which are all still very important to stay innovative –  consumers still very much care about how they are treated and the connectivity they feel with their bank.

To stand out in this new landscape, financial institutions know they must deliver what Ernst & Young calls the “omni-channel experience”: consistent quality and convenience — at home, on the go and in the branch.  For financial institutions, this outlines an opportunity for creating a stand-out omni-channel approach: connect with the customer where they are, provide a seamless choice of channels and ensure security throughout.

Take for example how consumers feel with instant issuance. Javelin Strategy recently reported that:

“Today’s consumers expect real-time delivery of goods and services, and instant issuance meets these demands, and can provide significant and measurable improvement in brand reputation compared to financial institutions that are not delivering this capability. Cardholders who received their debit cards through instant issuance have a quantifiably more favorable impression of their primary financial institution.”

Instant issuance is now being implemented within all varying types of institutions – mega, community, credit union, etc.  It all comes back to the service levels that financial institutions can offer their customers through instant issuance – and mega banks are seeing this too.  By enabling customers to be instantly issued a debit or credit card upon new account opening or if their current card is compromised, it provides customers a level of satisfaction and trust – which ultimately leads to top of wallet placement, increased activation rates and ultimately revenue opportunities.

In addition, for younger generations, the drive for instant satisfaction and real-time service leads to a desire for self-service options. The shift toward this self-service economy, starting with the first ATM in 1969, is accelerating across a range of applications and consumer industries — from self-checkout at retailers, self-checking in transportation.  Financial customers already look to the ATM as the hallmark of self-service convenience and efficiency, and forward-thinking financial institutions are empowering the self-service economy by creating next-generation ATMs capable of delivering greatly expanded banking services and live customer service — on demand, 24/7.

The reality is that consumers have a plethora of options out there to choose from; and business models constantly reflect how financial institutions can increase their retention rate while minimizing attrition of customers.   The bottom line comes down to service levels and offerings.  This new Consumer Report is just another reminder that all financial institutions – whether traditional or non-traditional – cannot lose sight of this.

For financial institutions: our advice is to make your customer experience count and align your business model to reflect this.  If you keep customers top-of-mind, they will reward you for it and come to you.

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