Tracking movement closely day by day, CivicScience data show that trust in banks remains well below average among U.S. adults, tumbling five percentage points after news of the Silicon Valley Bank failure. Currently, 39% of U.S. adults say they have little to no trust in banks.
Although trust remains stable and has not slid further in the last two weeks, the impact on consumer banking is becoming tangible. Latest findings suggest that more than 1-in-10 U.S. adults are reevaluating how safe their deposits are in their current primary bank – 5% have already moved funds to a bank they consider to be ‘safer or more reputable’ and 8% plan to do so in the next 30 days.
Banks large and small (national, regional, community, and online) are likely to be impacted in the weeks ahead. Online banks are poised to see the biggest impact – 11% of respondents who primarily bank with online-only banks say they plan to withdraw and move funds. Those who primarily bank with a national bank are the least likely to withdraw and move funds to a different bank.
Data also show those who plan to move funds are more likely to hold accounts with more than one retail bank, suggesting that consumers may be moving funds to existing bank accounts versus opening brand new accounts. Among those who plan to withdraw and move funds, 65% reported having more than one bank account in Q1 of this year, compared to just 44% of those not planning to make any banking changes.
In terms of liquid assets, U.S. adults with $100-500K in savings are the most likely to have already moved funds (9%), and an additional 13% plan to. However, that’s compared to 22% of those with more than $500K in savings who say they plan to withdraw and move funds to a different bank. Banks should anticipate that a percentage of those with less in savings are also concerned about the safety of their money – notably, 17% of people with $10-25K in savings plan to make changes.
When it comes to demographics, age is a leading indicator. Nearly 1-in-5 adults under age 35 say they plan to withdraw and move funds to a different bank and 12% say they have already done so. In comparison, just 9% of those aged 35-54 and 4% of those aged 55 and older plan to move funds.
Additionally, individuals of all income groups are affected, with those making under $35K annually being the most likely to make banking changes. Hispanic, Black, and Asian Americans are also significantly more likely than White Americans to plan to move funds.
Other factors related to individuals who have made and plan to make banking changes in response to the recent banking crisis include:
- Economic outlook: Consumers who expect both their personal financial situation and the U.S. economy as a whole to get worse in the next 30 days are more likely to move funds.
- Savings expectations: Consumers who feel confident about the amount of money they have invested in savings, including retirement savings, are nearly twice as likely as those with lesser confidence to move funds.
- Fintech experience: Consumers who do the majority of their banking on a mobile device and those who have invested in cryptocurrency are significantly more likely than those with lesser or no experience in these areas to move funds.
It’s estimated that the impact of withdrawals would be felt by those seeking credit and loans, particularly from smaller banks with tightened lending conditions, which could lead to domino economic effects. To stay on top of changes to the banking industry and the broader financial market in real-time, work with us.