5 Frustrations Consumers' have with their BanksWritten by Carly Simon-Gersuk
Consumers’ frustrations with their primary financial institutions range from simple to outright rage. Although, how far will their frustrations go before a consumer will leave for another financial institution?
In its 2018 Retail Banking Vulnerability Study, cg42, a management consultancy firm, ranked consumers’ top five frustrations with their banking providers. The firm surveyed 4,050 U.S. consumers and it found that major retail banking brands face greater risks than ever before for losing consumers.
Let’s take a look at the top five frustrations consumers face with their banking providers.
1.Acting in dishonest, unethical or illegal ways
Consumers feel that banks only act in their own interest and don’t care about the interests of their customers. In hopes of receiving more money on interest, banks have predatory lending practices that can lead consumers into high debt. Some of these practices include charging high customers fees, increasing their credit limits, and up-selling them on accounts they do not need.
2.Constantly slapping them with nickel and dime fees
Bank fees raise annually at alarming rates, and some of them are hidden. BankFeeFinder.com released a report that analyzed over 5,000 US bank customers and found that Americans pay an average of $329 annually in bank fees (1). The report categories overdraft fees, monthly fees, ATM, and other fees.
3.Failing to offer competitive rates and pricing
The market between banks is competitive. Rather than driving down prices set at enough to cover the costs, banks measure pricing off shares. Reports show that the worst deals for consumers come from banks with the more common shares of ownership. For example, consumers may receive lower interest rates for CDs, but they are charged higher fees for maintaining deposit accounts.
4.Data breaches or exposing personal/account data
According to a report from Bitglass, a data protection company, financial institutions contributed 62% exposed data in 2019 (2). Financial services accounted for 6.5% of all breaches and 61.7% of leaked records. This high percentage of leaked information is largely due to the Capital One mega breach, which exposed 100,436,121 records. Financial institutions are continuously learning and evolving to defend against threats against malware, while at the same time these threats evolve with the potential to become harder to detect or block.
5.Hitting them with overdraft charges
The report by BankFeeFinder found that banks made over $33 billion in overdraft fees alone in 2017. It is argued that banks make money on overdraft fees by preying on mental lapses; that because of the timing that banks use to record credits and debits, consumers underestimate the risk of bouncing a check.
Written by Carly Simon-Gersuk