Consumer trust in major US banks has dropped sharply over the past two years according to JD Power. The main reasons? Unexpected fees, poor customer service, and negative press.
Jenius Bank president John Rosenfeld says that as high a figure as 17% of consumers will switch their financial institution in the next 12 months.
Go deeper with GlobalData
At first glance, that statistic is quite astonishing. In the UK, on 30 January, the annual account switching statistics confirmed, yet again, that annual UK switching remains a stubbornly low 2.5%.
And the UK, unlike the US, offers the guarantee of seven-day switching across the sector. Moreover, it is regulator backed and enjoys a 99%+ success rate involving 11.4 million switches over the past 11 years.
Rosenfeld tells RBI: “Don’t forget, there are 10,000 banks in America. So, if you don’t like one, you get a lot to go through to find one that you do like.” Moreover, he highlights the much higher annual switch statistics among the US youth and young adult segments. By contrast, only around 4% of US consumers aged 65+ switch their primary account-much closer to the UK numbers but still more than double the switching rate for UK seniors.
‘Massive kind of evolution or maybe revolution’ in consumer behaviour
“The average consumer in America has accounts at four to five different banks, and that number is much higher the younger you go in the population. Just think 10 years from now, that’s going to double most likely. There’s this massive kind of evolution, or maybe revolution going on.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalData“It used to be very convenient to have all of your accounts, your savings, your checking, your mortgage, your home equity, your investments, all at one bank. Things have evolved in the industry, such as the ability to move money from one bank to another almost instantaneously. It makes it far easier to have your accounts at different banks and interoperate very effectively.”
If Rosenfeld’s take on the US switching landscape is correct – and he has a distinguished banking CV and track record – the US banks need to sit up and pay attention to what he is saying.
Transparent communication, pricing, security
First off, he stresses the need for transparent communication. This means clearly explaining fees, avoiding hidden charges, and being transparent about how they handle customers’ money.
On pricing, his advice is simple-it needs to be fair. Consumers need to feel like they’re being treated fairly, so banks must prioritise fair pricing and practices to help people manage their money better rather than giving the impression of profits at all costs.
“One of the biggest frustrations is punitive fees. And there’s enormous pressure from the regulators on punitive fees, fees that punish a customer for either being lazy or making a mistake. They’re going to have to find ways to create value for their shareholders without making it from punitive fees. From an experiential standpoint, they’re going to have to change the perception of consumers that their bank is there to help the consumer do things better or smarter.”
And on security, he says banks must ensure that customers feel that their needs are always put first. So, they need to have confidence that their data and their money is safe.
The rise of Jenius Bank
Back in 2022, RBI reported that Japanese banking giant, Sumitomo Mitsui Financial Group, would roll out a new retail banking business, to be called Jenius Bank, to bolster its US operations.
The one line in that news brief that referenced the appointment of Rosenfeld as Jenius Bank president, could have referenced a career including senior roles at TD and Citizens Bank. In particular, he was EVP head of everyday banking at Citizens and President of Citizens digital bank.
Jenius launched in July 2023 with a personal loan product. A savings product followed in November 2023 offering a competitive 4.75% interest rate.
Says Rosenfeld: “Jenius Bank’s goal isn’t to create just another savings account option. We wanted to put something in-market that truly addressed the top needs of consumers in today’s climate. We’ll continue to take this approach in developing the rest of our product suite. It is a further commitment to giving our customers the tools they need to empower themselves with smarter banking to create a richer life for themselves.
“We’ve launched a number of capabilities that really key to the customer experience, such as our mobile apps, which have received great reviews in the app stores. We’ve also launched our remote deposit capture, which allows you to deposit a cheque through your phone. And then most recently, we launched what we called evolved banking. This is the ability to link accounts from multiple banks and view your entire financial life in one place. And that’s really what we’re after, to try to create this hub for customers that’s really focused on helping them manage their money better.”
Employee value proposition
In recruiting his team, Rosenfeld has a strong pitch to prospective new hires. For starters, the ability to work remotely and avoid the expense of relocation and with remote working, the time and expense of commuting.
He can also flag up the strength of its parent group, tech advantages and the culture of a start-up digital bank.
“We built Jenius 100% in the cloud, so we don’t have data centres somewhere, which has allowed us to move much faster. We can plug and play much faster than any of the traditional banks that have more legacy infrastructure. That has been a very appealing aspect, especially for technologists and engineers.
Additionally we’re backed by an enormous and incredibly strong parent organisation. Again, that’s another plus for employees, when they come in. They want to know that their employer is going to be there for the long haul, and there’s no question that SMBC will be here for the long haul. They have committed a serious amount of capital to help us build this and build it, right So my first statement to someone, when I interview them for a job is: Do you want to come and do it the way you always thought it should have been done? Because we’re building this bank with a whiteboard, and that’s how we’re designing it. We’re not taking on any old luggage, if you will, of infrastructure from an old bank that we’re trying to refit. We’re building it from scratch.”
