There’s a well-known paradox in U.S. politics: Voters tend to disapprove of Congress while nearly always approving of — and reelecting — their own representatives.
It turns out that Americans think about banks in much the same way.
The paradox of banking sentiment
Shelton Brown, a retail worker in Chattanooga, Tennessee, says his new bank, Simple, does better than its competitors.
In the rest of the banking industry, Brown says, “I could say that there’s some serious, gaping holes that could be met.” He gives customer service and the security of his information high marks at his new online-only bank.
His positive sentiments aren’t uncommon. According to a recent Gallup poll, over two-thirds of banking customers have good things to say about their own bank. Ernst & Young, the consulting firm, found that over 90% of consumers trust their bank moderately or completely. Evidently, bank loyalty is alive and well.
At the same time, the American Consumer Satisfaction Index consistently ranks banking in the bottom half of industries, a comparison that consumers don’t seem to make when rating their own banks. Banking and financial services companies also consistently rank last or nearly so in consumer studies like the Trust Barometer from Edelman, the public relations firm.
Logically, not everybody’s bank can be better than all other banks, any more than everybody’s political representative can do a better job than the rest. So why do so many people follow this paradoxical way of thinking?
The advantages of incumbents
Incumbent politicians are thought to derive some advantage from the relative mystery their competitors represent. Concerns about unknown banks may likewise make customers cleave to their own financial institutions, whatever the perceived flaws.
Although Brown jumped ship to join Portland, Oregon-based Simple, he says his time with his previous bank “wasn’t a bad experience, actually, at all.” But he also says that provider fell short on customer service and technological sophistication.
Elected politicians can get an advantage from making their good deeds more visible. Similarly, being a bank’s customer over time seems to enable more trust in it than the industry as a whole can generate for itself.
Frank Harris, a San Diego educator, acknowledges that the banking industry has had its failings — notably during the 2008 financial crisis. But he defends San Francisco-based Wells Fargo, where he’s done his banking for more than 15 years.
“They’re figuring out ways to make sure it doesn’t happen again,” he says, noting as an example that the bank now requires additional loan qualification paperwork.
All banks may be taking similar steps — perhaps at the behest of regulators — but consumers may get a better look at their own banks’ activities just by engaging in a long-term banking relationship.
Deciding whether to switch
Where politicians use their records and campaign promises to attract voters, financial institutions have to offer more tangible and immediate value to win customers. This makes it easy for even loyal customers to take a reasoned look at whether it’s time to make a switch.
And sometimes, they find it isn’t.
“It’s been a long relationship, but I’ve enjoyed it,” says Harris of Wells Fargo. That kind of praise would be any politician’s dream.
Image via iStock.