Bank mergers often shake customers out of their inertia in search of a better deal, something Atlanta’s SunTrust and Winston-Salem’s BB&T have to consider after their mega-combination.
Mergers that create bigger banks tend to lead to some shifts consumers won’t like: branch closings, longer wait times and potentially less competitive rates, industry observers say. But customers also are likely to get some goodies, from more robust digital banking options to new specialized kinds of lending.
Change comes with its perils.
More than one in four bank customers who have been through a recent merger say they have switched banks in the last year, said Paul McAdam, a senior director for J.D. Power. Only 3 percent of people made such a jump if they hadn’t been through a merger.
After bank combinations, consumer complaints tend to rise, covering everything from branch closings to longer wait times, he said.
If the SunTrust/BB&T deal goes through, the combined bank will take on a not-yet-announced new name and be based in Charlotte. The result: None of the banks with the five biggest metro Atlanta footholds — and a combined 70 percent of deposits — will be based locally.
SunTrust is currently the biggest player in its hometown, with more than a fourth of the market’s total deposits, according to federal data.
The next biggest Georgia-based bank? Synovus, with less than 3 percent of the deposits in metro Atlanta. And its headquarters are in Columbus.
Losing SunTrust’s headquarters isn’t likely to make a difference in whether Atlanta businesses or homeowners can get basic loans, industry watchers say. The combined bank isn’t going to retreat from such a huge market.
But the combination could affect borrowers and depositers in other ways.
“Our general position is that mergers of this type reduce competition and often leads to increased prices and less options for consumers,” said Liz Coyle, who leads consumer group Georgia Watch.
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Greg McBride, the chief financial analyst for Bankrate.com, said the merger will create a company with greater market share in the Southeast and especially in Atlanta.
“What we have noticed in the past,” he said, “is that with concentrated market share tends to mean less favorable pricing for consumers, less competitive deposit rates and less competitive pricing for many loans.”
The biggest players also generally don’t offer the lowest fees, McBride said.
Consumer advocate Clark Howard said SunTrust and BB&T are already big players.
“These are really high-cost operators,” he said. “They are high cost to do business with. For consumers that will not change.”
Howard predicted though that mergers of regional banks will offer consumers better, more robust digital banking services. Bankrate.com’s McBride said the larger company would have resources to offer new and more specialized loans for consumers and businesses.
The two banks are highlighting the positives.
“I think it is clear that the combined company can do more than we can alone,” SunTrust Chairman and CEO William Rogers Jr. told analysts, adding the bank is “relentlessly focused on the client.”
The merger is being driven by the need for SunTrust and BB&T to innovate, said BB&T Chairman and CEO Kelly King.
“We’re finding the consumer is demanding real-time satisfaction, they want what they want, where they want it, exactly when they want it,” King told The Atlanta Journal-Constitution.
The combined company offers a bigger pool of branches and ATMs. Not all of them may survive, though.
SunTrust and BB&T have shed branches in recent years as more business shifts online.
About a quarter of the two companies’ banking centers are within two miles of each other. That could lead to hundreds of branch closures in the years ahead.
That comes with its own set of risks.
Consumer say their top consideration in picking a bank is convenience and proximity to a branch, said Bill McCracken, president of Norcross-based Phoenix Synergistics, which regularly surveys bank and credit union customers.
“Consumers tend to stay at banks a long time, a decade or more. They don’t like to move the relationship or accounts,” he said. People who frequently visit branches show the most loyalty to a particular bank while digital-only customers show the least, he added.
