The fall of three banks including Silicon Valley Bank hardly rattled Americans’ trust in their financial institutions, as most customers remained confident that their banks will do the right thing to safeguard their deposit, according to a survey by Morning Consult.
Seventy percent of customers indicated that they trust U.S. banks, with wealthier households (those making more than $100,000) showing a higher level of trust (77%). The poll was conducted Monday through Wednesday and included 2,190 adults.
Customer confidence was high across all types of banks, with regional bank customers showing the highest confidence (81%) in their banks. National bank customers followed with 78%, and community bank customers came in at 71%. Digital bank and credit union customers were somewhat less likely to trust banks to do what is right, but nevertheless, most of them, 57% and 67%, respectively, gave their bank a vote of confidence.
“I am really heartened by the fact that consumers are smart and are able to look at this and stay calm for the most part,” said Charlotte Principato, Morning Consult financial services analyst.
Principato also noted that the high percentage of regional bank customers who still have faith in their banks is encouraging and a relief to the regional banks themselves. “The customers are doing a good job of recognizing that [SVB, Silvergate Capital and Signature Bank] are not your average regional banks in that they were hyper-focused in a specific industry,” she said. “So, I think it was recognized that this is a failure of bank management of a specific bank and not a systemic issue."
And while most customers overall are undaunted by the recent turmoil, the survey found that one in five adults withdrew some or all their money from their account to somewhere else, such as their home or a safe. Principato said she was surprised by this finding especially considering the “unchanged trust” in banks that their data has been showing.
A Morning consult poll in February showed that fully two-thirds of consumers said they trust their banks, and nine in 10 said they were satisfied with their banks.
“The vast majority of Americans are still confident that their bank would be able to cover their deposits, so, to see that calm mentality in a lot of the data and then to see a good chunk of consumers actually did what we don’t want them to do, which is to take their money out of banks, that’s surprised me,” she said.
Also somewhat surprising was that 15% of respondents indicated that they moved all or some of their money to a new bank account or credit union, Principato said. But she noted that’s not out of the norm, explaining that the data they have been tracking for the past year shows that about 15% of the population had been thinking about moving their money to a new institution and about 10% of the population has either open or close a new bank account in any given month.
As for who moved their money out of banks, Principato said it was mainly cryptocurrency owners who saw it as an opportunity to make money. She noted that Bitcoin was founded during the Great Recession and crypto owners may have thought this crisis was going in that same direction. “So, they may have said, ‘I am going to take my money out of the bank and use my cash to buy cryptocurrency with the hope that Bitcoin or whatever cryptocurrency will rise’,” she said. “And they are not wrong. Bitcoin has risen a little,” Principato noted.
The price of bitcoin surged on the announcement that the U.S. government would protect SVB depositors. It has continued to rally and has risen more than 6% over the past 24 hours to near $27,000.
Most survey respondents believe there will be other crises in the banking industry. Sixty-five percent said there will be more bank failures, which they believe will not personally impact them.
In a parallel poll of 1,987 registered voters, 60% of respondents approved the Biden administration’s move to make bank depositors whole, while 62% believe it represents a “bailout.”
Republicans (74%) were most likely to call it a bailout, though 52% of Democrats and 62% of independents agreed. Respondents from both parties equally laid blame on the bank’s management for the failure of SVB, with 38% of Democrats and 37% of both Republicans and independents agreeing.