Why banks mistake learned helplessness for loyalty, and what changes when leaving gets easier.

Ask a bank why its customers stay and you will hear words like trust, relationship and loyalty.

Ask the customers, and you may hear something else.

“My paycheque goes there.”
“Our mortgage is with them.”
“We opened the joint account when we got married.”
“Honestly, they’re all the same.”

None of these sentences is about the bank. They are about what it would take to leave. That difference is easy to miss from the inside. A retention report shows one thing: the customer is still here. It cannot show why.

A customer can stay because they chose to. They can stay because leaving is hard. Or because they stopped believing leaving would change anything.

All three look the same on a dashboard.

Researchers drew this line decades ago. Alan Dick and Kunal Basu described loyalty as the relationship between two things: how a customer feels about a business compared with its alternatives, and whether they keep coming back. Repeat business is only half of it. A customer who keeps returning without preferring you is not loyal in that sense. They are present.

Banking is full of presence.

Imagine a couple in Toronto. Both paycheques land in the same chequing account. The mortgage, the line of credit and the kids’ RESP sit at the same bank. Every month, pre-authorized payments go out for hydro, insurance, the gym and the car.

One month they notice a fee they didn’t expect. They’re annoyed. That evening, one of them looks at another bank’s website. Then they think about what moving would involve. New direct deposit forms for two employers. A dozen bills to update. A mortgage that can’t move before renewal without a penalty. The worry that something will bounce halfway through.

They close the tab.

The next year, it happens again. This time they don’t open a tab at all. They say what many people say: they’re all the same.

The bank records two more years of tenure. It may even count them among its most loyal customers.

In 1967, Martin Seligman and Steven Maier published experiments in which dogs that had received shocks they couldn’t control later failed to escape shocks they could have avoided. They called it learned helplessness. The idea travelled far beyond the lab. It became a way to describe people who stop trying after learning that their effort makes no difference.

Fifty years later, Maier and Seligman revisited their theory in light of what neuroscience had since shown. They concluded the original explanation had it backwards. Passivity in the face of prolonged bad events was not learned. It was the default. What could be learned was control: the discovery that your actions can change what happens.

Note: I want to be careful here. A customer frustrated with their bank is not suffering from a clinical condition. I’m borrowing an idea, not a diagnosis. But the revised finding fits banking uncomfortably well.

A bank doesn’t need to teach its customers to give up. It only needs to make sure they never experience control. Fees that are hard to compare. A switching process with many steps. A mortgage that ties everything together. None of it has to be designed to trap anyone. It just has to make every attempt to leave feel bigger than the problem that started it.

After a while, people stop trying. From the outside, that looks a lot like contentment. It helps to separate what keeps a customer in place. There are at least three locks, and each needs a different key.

The first is cost. Some reasons for staying are real. Moving a paycheque, redirecting payments, refinancing a mortgage and closing a joint account all take time, and some cost money. These are not biases. They are part of the decision.

The second is attention. People tend to stick with what they already have, even when they would choose differently starting fresh. William Samuelson and Richard Zeckhauser found that Harvard employees who had been in a health plan for years were far more likely to keep it than new employees choosing from the same options. Nothing stopped the long-time employees from changing. The current plan won by default.

The third is belief. This is the lock that sounds like “they’re all the same.” It isn’t a cost or a habit. It’s a conclusion: that choosing differently wouldn’t make life better.

Most conversations about switching focus on the first lock. Make leaving cheaper and faster, and people will leave. The evidence says it isn’t that simple.

The United Kingdom has spent more than a decade making it easier to switch bank accounts. Its Current Account Switch Service moves balances and payments to the new bank and guarantees the move within seven working days. It finishes 99.6% of switches on time, and 75% of people know it exists.

The UK removed most of the cost lock. Switching still didn’t take off. About one million switches happened in 2025, fewer than in 2023 and 2024, when higher interest rates gave people more reason to move.

When researchers at the UK’s competition regulator studied the market, they found that only 3% of customers had switched their main account in the past year. Among those who had looked around, 14% switched, and three-quarters of switchers had searched first. The regulator’s conclusion was blunt: older and larger banks “do not have to work hard enough to win and retain customers.”

The bottleneck wasn’t the move. It was the decision to look.

What happens after people move is just as telling. Of those who switched in the spring of 2025, 71% preferred their new account. Only 2% said it was worse in any way.

Many people only discover they were stuck after they leave.

Canada has run a version of this experiment before. Since March 2007, Canadians have been able to keep their phone number when they change wireless providers. Before that, your number was a lock.

Portability didn’t set off a rush for the exits. A year later, Rogers reported that monthly postpaid churn had fallen from 1.17% to 1.10%. One company’s numbers can’t tell the whole story, and many things affect churn. But portability alone clearly didn’t change much.

Part of the reason was that the number wasn’t the only lock. Contracts of up to three years held people in place. In 2013, the CRTC’s Wireless Code limited cancellation fees so customers could leave at no cost after at most two years. The goal was to let people “take advantage of competitive offers at least every two years.”

Remove one lock and the next one starts to matter more.

Canada is starting down the same path with banking. The first stage of consumer-driven banking lets people share their financial data with approved providers. It doesn’t yet let those providers act on their behalf. The government has said it will legislate that next step, including switching accounts and paying bills through third-party apps, by mid-2027. Mortgages will still follow their own terms and renewal dates.

So the escape hatch is coming, but it isn’t open yet. And when it opens, the UK suggests it won’t empty the building.

Something else is already happening. Canadians aren’t walking out of their banks. They’re drifting away one product at a time. In 2025, 24% of people surveyed by Environics had opened banking services at an institution other than their primary bank in the past year. That’s the highest level in the 20 years the study has run. The paycheque stays. The savings, the investments, and the attention go elsewhere.

That’s what helplessness looks like when it starts to lift. People don’t leave all at once. They try something small, it works, and they learn they have more control than they thought.

None of this means banks have no loyal customers. Many people stay because a bank has treated them well, sometimes for decades. That relationship is real, and it’s valuable.

The problem is that most banks can’t tell those customers apart from the ones who are simply stuck, because both groups produce the same numbers.

One question separates them: if leaving cost nothing tomorrow, who would still be here, and why? The answer is a bank’s real loyalty. Everything above it is captivity, and captivity has a shelf life.

A few signs can show a bank which one it has:

• Customers who rarely leave but rarely recommend you.
• Customers whose paycheque arrives with you while their savings grow somewhere else.
• Revenue that depends on customers not noticing, like overdraft and late fees.
• Customers who describe you as “the same as the others.”

None of these proves helplessness. Each is worth looking into. If a bank wants to know where it stands, five questions help.

1. What keeps each customer here? Ask, and separate reasons of choice from reasons of cost.
2. What did customers consider before staying? If they considered nothing, that isn’t a vote of confidence.
3. What do you earn from customers’ inattention? Fees that rely on people not noticing can’t sit beside a claim to be valued.
4. What happens when customers try something small elsewhere? Their first experience of control will shape what they do next.
5. What would you do differently if leaving were free? Do some of it now.

The banks that come out ahead won’t be the ones that make leaving hardest. They’ll be the ones customers would still choose if leaving were easy. A customer who stays is not proof of loyalty. It’s proof that they stayed.