2006 IBT/MCA Market Pulse Survey Finds U.S. Consumers Still Seek A Face-to-Face Experience From Financial Service Providers

The toaster is officially “toast” – the majority of U.S. adults say a free toaster, cash or even an iPod will not get them to change financial institutions

-Full Disclosure: IBT is an Arketi Group client and we conducted this survey-

ATLANTA – March 21, 2006 – IBT Enterprises and MCA Works announced the findings of the 2006 IBT/MCA Market Pulse Survey, which seeks to understand how U.S. adults feel about and use financial services. The study, released at the 16th Annual IBT Trends Conference, reveals that when it comes to financial services the “human touch” still matters to a great number of consumers.

The survey of almost 700 U.S. adults using financial services found that despite decades of predictions that technology-driven channels like ATMs and online banking would replace traditional banks, 50 percent prefer to bank face-to-face (bank branch, in-store branch and drive through). Thirty percent of those surveyed prefer to bank online, 18 percent opt for ATMs and 2 percent say mail or telephone. For more information or to download a complete copy of the 2006 IBT/MCA Market Pulse Survey report, please visit www.ibtsource.com/viewpoint.htm.

While it is true the vast majority of U.S. adults use multiple channels to conduct their financial transactions, which include the stand-alone bank branch, drive-through windows, in-store banking, online banking and ATMs, 76 percent of Americans “love” or “don’t mind” going inside the branch to conduct business.

The study showed that consumers preferred face-to-face interaction with their financial institution representatives for more complex transactions such as making a deposit (69 percent), applying for a loan (65 percent) and opening a new account (64 percent). Automated banking (ATM, online and telephone banking) was most popular with respondents when it came to paying bills (64 percent), cash withdrawal (56 percent) and transferring funds (54 percent).

“Savvy banks and credit unions know that having convenient touch points opens greater opportunities for them to delight consumers and increase their share of that consumer’s business,” said Mylle Mangum, CEO of IBT, a leader in design and construction services for the financial services and specialty retail industries. “By offering a robust and integrated channel of banking methods, financial institutions are in a better position to solidify their relationships with consumers. Moreover, the delivery channels should match the consumer’s life stage/life cycle needs. For instance, drive-through windows are extremely important to families with children.”

Eighty-four percent of U.S. adults say they use retail or commercial banks, 40 percent say they use credit unions and nearly a third (28 percent) say they use securities and investment institutions. Sixty-nine percent of U.S. consumers have designated a retail or commercial bank as their primary financial institution and 19 percent have designated a credit union as their primary financial institution.

Highlighting the old marketing tenet -- “get them early and keep them” -- when asked about promotions to switch to another financial institution, 41 percent of U.S. adults said that “no amount of money or promotion could ever get me to switch.” However, one-third (33 percent) said they would switch if offered a $250 gift card and 20 percent said they would switch for 1 percent difference in their interest rate for deposits. Interestingly, 5 percent said they would switch financial institutions for an iPod. And of course, the toaster is now officially dead with only one percent reporting they would switch to a new financial institution in order to receive a new toaster.

Other findings on the uses of financial institutions include:

• Nearly all respondents (97 percent) use a checking account. Seventy-eight percent use a savings account and nearly three-quarters of U.S. adults have a credit card issued to them from a financial institution.
• Almost half of all consumers surveyed (47 percent) have loan debt, either auto, home or school loan.
• The majority of U.S. adults would look to their primary financial institution if they needed a business loan (72 percent), home loan (69 percent), home refinancing (69 percent), car loan (49 percent) or other loan (67 percent).
• Forty-seven percent of U.S. adults reported using investment products such as stocks, bonds, CDs, mutual funds and retirement accounts and 18 percent have a safety deposit box.
• When asked about the fairness of service charges, 75 percent of U.S. adults felt that their service charges were fair.

Several attributes are important in evaluating a financial institution, such as having convenient locations, fast and efficient service and resolving problems quickly. The strong desire to conduct deposits at branches exemplifies the need for well-designed, location-conscious facilities that offer fast and efficient service. More than one-third (38 percent) of U.S. adults most often deposit money while inside the branch and a near equal number (34 percent) most often conduct deposit transactions through the branch drive-through window.

Illustrating that personal relationships are less common in the world of financial services today, 54 percent said that they do not have a good relationship with a specific individual at their primary financial institution. However, 60 percent of those surveyed say they have been banking with the same primary institution for five or more years.

When customers do switch financial institutions they do so largely because of life events (50 percent), product and service offering shortcomings (48 percent) or poor customer service or a bad experience (38 percent).

“Despite banking consolidation and automation, institutional relationships still matter because the majority of those surveyed have been with the same bank for the last five years or more,” said John Rosen, executive director of MCA Works. “And those who left did so because of dissatisfaction with customer service issues ranging from product offering shortcomings to poor customer experience, so the survey indicates the relationship matters and can be improved.”

While several attributes were important in evaluating a financial institution, some of those areas fell short on consumer satisfaction. For example, nearly all consumers (96 percent) felt that charging reasonable fees is important; however, only 81 percent were satisfied with their financial institution in this regard. Likewise, 94 percent felt it is important for their primary financial institution to offer competitive interest rates, and only 82 percent felt satisfied in this regard. Eighty-seven percent of those surveyed felt it was important that their primary financial institution “really wants my business,” and only 81 percent felt satisfied with their financial institution in that regard.

Seventy-five percent of those surveyed said that their financial institution has designed its branch for people like them. There are several factors that consumers feel are most ideal when it comes to branches:

• Getting in and out of the branch in less than five minutes (83 percent)
• Accessible parking (68 percent)
• Fast line for deposits only (40 percent)

Underscoring the opportunity for branches to support small businesses with valuable add-ons, the majority of U.S. adults (59 percent) said that offering services such as postage and shipping would enhance their visit to their financial institution’s branch. Approximately one third (30 percent) said offering wireless Internet access and an almost equal number (27 percent) said that offering a coffee bar inside the branch would make them more excited about visiting their financial institution’s branch. This also illustrates a possible trend that time-pressed consumers may prefer financial institutions that offer expanded services in an effort to help consumers reduce time spent out of the office or home. The data show that all age categories were interested in the availability of postage and shipping services within a branch. The youngest age group (18 to 24 year-olds) was most interested in this service.

If a consumer wins the lottery, one might be surprised about who that lucky person might call first for financial advice. When asked about unexpectedly coming into a large sum of money ($250,000), 25 percent of U.S. adults said the first person they would call would be an accountant, 19 percent said a family member, 12 percent a banker, 10 percent stock broker, six percent friend and 1 percent a real estate broker. Interestingly, 27 percent of those surveyed said they would not call any of these individuals for financial advice.

Investing that money is a little more clear-cut. Thirty percent of Americans said they would likely spend the majority of a $250,000 windfall to pay off debt and an equal number said they would invest the money in a savings account. Eighteen percent said they would spend the majority of the money on a house. The majority (60 percent) said if they choose to invest any part of the newfound $250,000 they would do so through an alternative financial institution such as a stock broker or mutual fund company rather than their current primary financial institution (40 percent).

When asked to personify their financial institution (for example who it would resemble the most), 47 percent of U.S. adults selected Donald Trump, suggesting consumers revere their financial institution as smart, savvy and successful. Second on the list was Mary Poppins with 39 percent support followed by Ebenezer Scrooge (8 percent) and Tony Soprano (6 percent).

Overall the study found that 87 percent of U.S. adults use financial services providers such as retail banks, credit unions, savings and loan and financial securities firms. The survey results are based on Americans that use the above financial services providers.

About The 2006 IBT/MCA Market Pulse Survey
Conducted in February and March, the 2006 IBT/MCA Market Pulse Survey is based on an online survey among a nationwide sample of U.S. adults that have an account at a financial institution. Of the 696 participants, 33 percent are from the South, 28 percent from the Midwest, 24 percent from the Northeast and 15 percent from the West. Of the respondents, 51 percent are male and 49 percent are female. The margin of error for the survey is plus or minus 4 percent. The research was conduced by Atlanta-based Arketi Group.

Editor’s note: Camera-ready charts and graphs on the findings from The 2006 IBT/MCA Market Pulse Survey are available at www.ibtsource.com/viewpoint.htm or by calling Brian Boudreaux at 404-929-0091 ext. 211.

About IBT
IBT is a leading source of forward-thinking designs and ideas in the arena of branch banking. Over its 21-year history, the company has consulted to more than 175 retail and 500 financial services clients on the development of more than 3,000 workspaces. IBT offers a comprehensive range of integrated services, including retail distribution strategy, market research, space planning, design, architecture and construction. For more information about IBT visit http://www.ibtsource.com/.

About MCAMCAworks (aka Marketing Consulting Associates, LLC) is a strategic marketing consulting firm passionately dedicated to helping clients accelerate and sustain business growth. Our leadership team has more than 100 collective years of business experience working globally with market leaders in most industries, including Financial Services and Banking. MCAworks offers a comprehensive set of strategic growth services, ranging from business strategy and marketing strategy to brand building and organization. For more information, please visit our website at http://www.mcaworks.com/