This article originally appeared in the The Business Times Singapore (subscription required).

Banks, your customers are quietly leaving you.

When Bain & Company surveyed 83,000 customers in 22 countries recently, it found that more than one-third of them bought a banking product from their primary bank's competitors during the past year. The rate of defection reached an average of 28 per cent in developed countries. In Singapore, 48 per cent of customers went to a different bank to obtain a credit card, buy insurance, or apply for a car loan or another financial product.

If that many bank customers were closing their current accounts each year—completely defecting—bankers would be up in arms. Yet the hidden defection, often involving more lucrative products, goes largely unnoticed by banks because they seldom know their customers were shopping in the first place or that they lost the business.

This trend is accelerating as digital startups and specialist firms, less encumbered by creaky old IT systems and a thicket of banking regulations, offer better, simpler solutions and make it easy for people to find them. Strong demand for peer-to-peer lender Lending Club's recent initial public stock offering is just the latest sign of the confidence of investors and customers in alternative business models.

Meanwhile, banks' classic advantages—personal relationships between bank managers and customers, big branch network and a reputation for security—have been crumbling. Even regulation in some countries, such as the UK, has grown more accommodating, as regulators who once frowned on new business models now want to promote competition.

As a result, bank revenues and profit margins look more and more vulnerable. 

Read the full article at The Business Times Singapore (subscription required).