Almost 10% of customers at large and midsize U.S. banks switched their accounts last year to smaller firms, citing issues with bank fees and customer service as well as unmet expectations.

A report out Monday from J.D. Power and Associates indicates that most of the beneficiaries from the bank exodus were to smaller banks and credit unions, which have seen a 2.1% increase in customers since last year.

The still-small trend of customers leaving large banks is increasing, especially on the heels of “Bank Transfer Day” on Nov. 5, 2011. Last year's 9.6% transfer rate was up from 8.7% the year before, and 7.7% two years ago.

Fees are cited as the biggest reason for pulling out of a larger bank. One third of all survey respondents who transferred listed it as their top reason to leaving. 

“It is apparent that new or increased fees are the proverbial straws that break the camel’s back,” aid Michael Beird, director of the banking services practice at J.D. Power and Associates. “Service experiences that fall below customer expectations are a powerful influencer that primes customers for switching once a subsequent event gives them a final reason to defect. Regardless of bank size, more than one- half of all customers who said fees were the main reason to shop for another bank also indicated that their prior bank provided poor service.”

Dennis Santiago, CEO of Institutional Risk Analytics, said the uptick in bank transfers matches with his company’s “Move Your Money” widget, which helps consumers figure out how to move their money from big banks to smaller ones.

The app saw a huge increase in hits starting in October, when it was accessed by 19,258 users – up by more than 300% in September. The hits increased to more than 35,000 in November, and hovered at around 25,000 for December and January.

Santiago said while many may like to peg the hits on “social conscientiousness,” like increasing attention given to the Occupy Wall Street Movement or annoyance over the foreclosure crisis, fees were the biggest reason for the traffic.  

“Remember that prior to this the fees to pay for card use fraud were collected as part of the merchant fees.   This got taken away but the fraud cost was still there and the banks tried – with resulting reputational egg on their faces – to shift that cost to other side of the transactions.

Unsatisfied customers shopping around leaves banks with many opportunities to grab them up, and many of the most successful banks do so with promotional offers and cash incentives, said J.D. Power and Associates. Though unnamed, one of the highest performing banks in the survey said 19% of new customers switched due to promotions.

While that might be useful getting people in the door, Beird said it wasn’t effective in the long run.

“Only 32% of customers who selected a new bank because of promotional offerings said they definitely would not switch banks again in the next 12 months,” said Beird. “In comparison, 46 to 51% of customers who chose the new bank because of either good service experience or positive recommendations say they definitely will not leave within the next year.”