November 9, 2011
cg42, a Connecticut-based boutique management consultancy, today released the results of a groundbreaking study that ranks the top national retail banks according to the risks associated with their greatest vulnerabilities. Based on survey of 5,600 real, primary customers, the Brand Vulnerability Index (BVI) measures the frustrations of consumers and their corresponding effects on behavior, most notably attrition.
The study indicates that $399 billion in customer deposits are in jeopardy (“in play”) at those 10 banks, and $185 billion of that amount is projected to exit in the next year. Of the 10 banks included in the study, Bank of America has the highest brand vulnerability, while PNC has the lowest.
"It’s no surprise that customers are growing increasingly frustrated and feeling like many of these institutions are taking advantage of them – the data reflects that,” said Stephen Beck, Founder and Managing Partner of cg42. “But now – for the first time – we actually have a way to determine the effects of those frustrations on the balance sheet. It’s critical for financial institutions to understand how their products, services and operating policies truly impact customer behavior.”
"The Brand Vulnerability Index will ultimately help companies improve their offerings and gain a competitive edge by assessing customer sentiment effectively – and it goes far beyond the utility of traditional ‘brand strength’ measurements.”
BVI surveyed four components of brand vulnerability, including: Frequency of customer frustrations; customer sharing behavior (for example, disclosure of frustrations on social media); the impact of frustrations on customer behavior; and the uniqueness of those frustrations to a particular bank.
Responses were collected, analyzed, and modeled to produce a ranking of the top 10 retail banks by vulnerability, from most to least:
1. Bank of America
3. Wells Fargo
4. Capital One
8. US Bank
The following takeaways represent several key findings from the study:
• 10.3% of Bank of America’s customers are expected to defect and move their deposits to another institution in the next year
• 71% of customers believe that banks merely claim to have consumer interests at heart but in fact only care about their own interests
• 50% of customers are uncomfortable with how large some banks have become
• 70% of customers prefer to diversify their financial relationships across several providers
The results of BVI carry broad implications for banks and their customers. How should banks allocate resources to improve customer satisfaction? What can they do to maintain deposit levels? How can they exploit their competitors’ weaknesses to capture market share? The value of illuminating vulnerabilities – as opposed to strengths – is significant.
The BVI framework can be applied to other industries to produce similar results; cg42 will release new studies in the coming year.
cg42 is a boutique management consulting firm that helps clients effectively create demand through customer-led growth strategies. We are passionate about helping our clients move beyond the rhetoric of marketing today, operating under a model that is based on strong discipline, purpose, and objectivity. Our expert team is comprised of senior professionals with vast industry experience, having successfully worked with major global brands in the financial services, professional services, technology, telecommunications, healthcare, and consumer goods and services sectors. For more information, please visit: www.cg42.com. And remember – Don’t Panic.