What’s in an Address Change?
We’ve been spending the past few years understanding everything there is to know about the ‘risk’ of an address change for financial services companies. We know that this is the leading indicator of account takeover and a major reason for the new Red Flag Guidelines.
Over the past few weeks, however, we have begun to look at the business problem a bit differently. While the address change event is associated with risk, this risk is relatively low. However, we are finding that the address change event is the single largest reason for a customer leaving the bank!
We have found that approximately 70% of all consumers that move consdider changing their primary banking relationship and that nearly 25% of consumers do end up changing their primary bank account within 120 days of moving.
When you think about it, it make sense. When you move, many times you move away from the bank branch where you conducted your banking. In doing so, it is somewhat likely that you change your bank account to be closer to the branch. Couple this with the fact that banks routinley are targeting new customers with Free $50 offers, and you can see how 25% of movers change banks.
When you consider that 15% of a typical banks customers move every year, this equates to 3.75% of their deposits walking out the door. When we ask banks what they are doing to retain these customers, the answere is almost always “nothing”.
We believe there is a major opportunity to stop a significant percentage of these customers from attriting by communcating more effectively. For example, telling them about your remote banking options, or offering up a home equity line to someone that moved into an owned home.
We are beginning to look more holistically at the Address Change Event as being one of the most important in the customer’s lifecycle. An event that includes bothe risk AND opportunity.