J.D. Power and Associates Reports: Switching Intent among Customers Increases up to Threefold When Banks Are Acquired

WESTLAKE VILLAGE, Calif. — The likelihood of customers switching banks increases by up to three times after their bank merges with or is acquired by another financial institution, according to the J.D. Power and Associates 2009 Bank Mergers and Acquisitions Report.SM

“Overall, customers of acquired banks perceive that acquiring institutions are far less focused on customer interests and personal service than their previous bank,” said Rockwell Clancy, executive director of financial services at J.D. Power and Associates. “As a result, these customers are much more likely to change banks, particularly during the first six to nine months following the announcement of a merger or acquisition.”

The report examines the drivers of customer satisfaction and dissatisfaction with their new banks following mergers that took place during the past three years. Using customer satisfaction scores from the J.D. Power and Associates studies on retail banking for 2007 and 2008 as benchmarks, the Bank Mergers and Acquisitions Report compares pre-merger customer satisfaction with current satisfaction levels and identifies opportunities for improvement in the merger process. The report also provides a snapshot of perceptions and attitudes of customers of Chase/WaMu; Wells Fargo/Wachovia; PNC/National City; and Capital One/Chevy Chase—which are currently undergoing mergers.

Among customers of financial institutions that have fully consummated mergers during the past three years—including Regions Bank/AmSouth; Bank of America/LaSalle Bank; Capital One/North Fork Bank; TD Bank/Commerce Bank; and Huntington National Bank/Sky Bank—post-merger dissatisfaction is primarily driven by three factors:

* Magnitude and number of changes made to customer banking activities
* Types of changes made to routine customer banking activities, such as changes in bank hours, fees or automatic payment or debit functions
* Communication about impending changes to customer banking activities

Among customers of banks that are currently undergoing an acquisition, fewer than one-half report that they are receiving a sufficient amount of information from their financial institution about the merger. Furthermore, when customers find out about the merger from a source other than their financial institution—such as the media or a friend or family member—they are twice as likely switch banks, compared with customers who report receiving merger or acquisition communications directly from their bank. Approximately 75 percent of customers of these merging banks state that they received information about the mergers from a third party, rather than their bank. This figure is twice that of customers of banks that have fully consummated mergers.

“Customers who are uneasy about their financial institution’s merger present a sizable opportunity for competitors,” said Clancy. “Conveying messages about the competing bank’s stability and reliability and not subjecting the customer to unpleasant surprises will resonate with this group and could potentially result in new business.”

The 2009 Bank Mergers and Acquisitions Report is based on responses from 3,111 customers evaluating 17 banks. The report was fielded in February 2009. To download a copy of the Bank Mergers and Acquisitions Report, please click here.

About J.D. Power and Associates
Headquartered in Westlake Village, Calif., J.D. Power and Associates is a global marketing information services firm operating in key business sectors including market research, forecasting, performance improvement, Web intelligence and customer satisfaction. The company’s quality and satisfaction measurements are based on responses from millions of consumers annually. For more information on car reviews and ratings, car insurance, health insurance, cell phone ratings, and more, please visit JDPower.com. J.D. Power and Associates is a business unit of The McGraw-Hill Companies.

About The McGraw-Hill Companies
Founded in 1888, The McGraw-Hill Companies (NYSE: MHP) is a leading global information services provider meeting worldwide needs in the financial services, education and business information markets through leading brands such as Standard & Poor’s, McGraw-Hill Education, BusinessWeek and J.D. Power and Associates. The Corporation has more than 280 offices in 40 countries. Sales in 2008 were $6.4 billion. Additional information is available at http://www.mcgraw-hill.com.