Nearly a quarter of consumers are likely to switch banks in the coming year

Calibre, a global data provider for stakeholder tracking, announced the release of its 2023 Financial Services Reputation Report. The report, which provides a global snapshot of how financial institutions are perceived, surveyed over 10,000 consumer respondents globally between January and May. This year’s report compares results to the company’s survey from 2021.

Key highlights of the 2023 report include:

• Churn risk remains high, especially in the US: About a quarter of people worldwide (23%) say they’re likely to switch banks in the next 12 months. In the UK, where over 1,600 respondents were surveyed, this decreases to just one in five people (22%) – down by 11% points from 2021.

• Fees and social responsibility fuelling the desire to switch: Thirty-one percent of people worldwide say bank charges are too high. The risk of churn is driven mainly by these high fees and prices and the sense that banks do not always act in their customers’ best interests.

• New entrants gaining reputational ground: Overall, people engage less with their financial services providers than two years ago, and they continue to view the FinTech sector as more trustworthy than the banking sector, but globally, the gap has narrowed since 2021. In the UK, the gap narrowed from eight points to just two points between the most reputable bank and the most reputable FinTech company.

Feel the churn – the impact of declining customer support

Calibre’s report reveals that public support for the financial services sector has declined since 2021:

• Only a third of people worldwide are likely to advocate for, recommend or choose to work for financial services companies – a slight decline from 2021.

• Only 34% of people are willing to buy products and services from the world’s largest banks, down from 37% in 2021.

• Fifty-five percent of people are familiar with the largest brands in the banking industry worldwide – down from 67% in 2021. In the UK, the top traditional banking institution is Lloyds Banking Group, based on Trust & Like score.

Trust & Like Score is at the core of a proprietary measurement system used by Calibre to show the strength of a company’s brand and reputation. The system combines several attributes related to brand, reputation, ESG and behaviour, as well as information on demographics, professional background and the touchpoints through which stakeholders interact with companies, summarised by a score on a 0-100 scale. Scores above 80 are considered ‘Very High’.

“Taken together, these numbers ought to concern the financial services sector. People tend to stay with their bank for a long time – longer than many marriages, in fact. So, while traditional banks remain a safe harbour for customers in the current macroeconomic climate, they shouldn’t take that for granted,” said Shahar Silbershatz, CEO and Co-founder, Calibre. “The data clearly shows that the FinTech sector is quickly growing in popularity, and customers are increasingly willing to explore alternatives to traditional financial services. Banks, insurance companies and other financial services providers around the world must heed this trend.”