Date Added: May 2010
The banking industry remains under huge pressure following the financial and economic turbulence of the last few years. This has resulted in new strategic opportunities for healthy banks to expand their geographic and customer footprints via acquisitions and mergers. And as the number of deals grows, so it has become evident that banks face a major challenge - can they successfully retain the potential value of their deals by reducing or stopping the loss of customers that tends to follow the announcement and completion of a transaction? To understand the issues around customer attrition in the wake of a merger or acquisition, the Deloitte Center for Banking Solutions conducted a survey of customers who had recently gone through such a transition to gather insight into what drives a customer to stay or to defect post-acquisition. This report first examines the behaviors of these customers and then provides detailed insight into how to build a framework that can guide a bank's efforts to help ease the transition process, identify and manage "Moments of Truth," and start building valuable relationships even before the merger or acquisition takes place. Consolidation within the banking industry has been steadily increasing for the last several years and the recent financial crisis has accelerated this trend. With a merger or acquisition comes the opportunity to grow and expand the business while capturing efficiencies through economies of scale. While the latter is a widely achievable outcome, banks often experience customer attrition after undergoing a consolidation. One of the key reasons for this may be that banks primarily focus on cost savings and place too little emphasis on efforts to retain customers.