Large banks are making in-person transactions more satisfying and fees more palatable, according to J.D. Power & Associates' 2007 Retail Banking Satisfaction Study released today.
Banks improved customer satisfaction in the past 12 months, the study said; the industry's average satisfaction score rose 2.9%, to 763 on a scale of 1,000. The improvement paralleled that shown by the University of Michigan's fourth-quarter American Customer Satisfaction Index, released in February, which said the banking industry's satisfaction score rose 2.7% from a year earlier, to 77 after three years at 75.
Bankers said the survey results reflect the industry's focus on customer service.
"Banks have recognized over the last few years that consumer banking is a very attractive segment of the marketplace; it has gotten more competitive," said Steve Rotella, the president and chief operating officer at Washington Mutual Inc., which was ranked No. 1 in the West and Midwest regions in the J.D. Power report. "It's a general view on the part of big companies that they are losing share, or have the potential of losing share, to those players that are clearly differentiating themselves in service."
Consumers this year put a premium on their experiences with transactions, particularly in branches. About 47% said transactions mattered, compared to 34% in the J.D. Power 2006 survey.
Bank executives said pleasing branch customers is not merely a question of adding tellers.
"Our customers are telling us that we need to do a better job of keeping the lines down," Commerce Bancorp Inc. chairman and CEO Vernon W. Hill 2nd said in an interview.
Commerce branches average 48,000 customer visits a month, about five times the industry average, he said, and the company is building 65 branches this year to relieve pressure on existing offices.
The Cherry Hill, N.J., bank was ranked No. 1 in J.D. Power's Middle Atlantic region.
The survey found so few Commerce customers who said they might switch banks in the next 12 months that it registered as 0% in the statistics. "We consistently win all of those awards because our model is all about delivering an exceptional customer experience," Mr. Hill said. "That's our first objective, and everything is designed around that."
J.D. Power, a Westlake Village, Calif., unit of McGraw-Hill Cos., said it based its conclusions on 21,026 Internet-based interviews done from Jan. 11 to Feb. 2. The research and consulting firm expanded its 2007 survey to 39 states, divided into six regions. Its 2006 survey was done solely in New York City and California.
The firm produced regional rankings for banks that were identified by at least 100 survey participants as their primary financial institution.
Richard Hartnack, a vice chairman and the head of retail banking at U.S. Bancorp, said branch performance is a question of both staffing and efficiency.
U.S. Bancorp, which was ranked fifth in the West region, is looking for ways to "reduce the time involved in transactions so we don't have to invest as much labor in getting shorter lines," he said.
"We're going through every operating procedure we have got and looking at the smallest things to try to take five seconds out of a transaction or 10 seconds out of a transaction to make the service that we give with the head count that we've got faster," he said.
Some recent changes at U.S. Bancorp: Tellers no longer lock coin trays every time they step away from their windows, there is less recounting of currency, buzzers have been placed in some branches to call for teller reinforcements when lines form, and those who approve teller transactions have moved out from behind their desks to be near the tellers during busy times.
At Citigroup Inc., customer kiosks in its 1,000 branches are part of a focus on customer satisfaction that has led to self-stick deposit envelopes at automated teller machines, snacks in some branches, and a faster funds availability policy, among other changes.
"It really is a culture change," said Deborah Harrington, the customer experience director at Citibank North America. "We have always been focused on moving product, but to really take the intelligence from our customers and our people and take it seriously to heart and work on it" has been a major change in the past year, she said.
The result: Citibank's customer satisfaction score jumped 8.5% from a year earlier, to 742. That was the biggest point gain in this year's survey. The company was ranked third in the West region and fifth in the Southeast.
The value of investments in customer satisfaction is not in dispute among bank executives and industry experts - particularly in the current operating environment where customers and their deposits are precious.
"Loyal customers stay longer, buy more, refer others, and often may be less expensive to serve," said Kelly Campbell, the director of customer satisfaction and loyalty research at Wachovia Corp., which was ranked second in both the Southeast and Southwest regions and fifth in the Middle Atlantic.
The survey found customers were less bothered by fees this year, and this may mean banks are doing a better job of explaining them.
"Banks are being much more proactive in giving customers tools" to avoid fees, said Shannon Johnson, a senior vice president at National City Corp. and the director of customer experience, a post created last summer. Nat City's score rose 5%, to 734.
Wamu, meanwhile, eliminated more than a dozen "nuisance fees" in May, including fees on money orders, gift checks, and notary service, Mr. Rotella said.
"We try to avoid nickel-and-diming people," he said. "There are a lot of nuisance fees that consumers are surprised about and are pain points. I think consumers are fair-minded and are willing to pay for services that are valued fairly and delivered fairly."
Other findings included 24% of customers finding an ATM out of service in a typical month, 42% saying their bank's Web site was inaccessible at least once in the past 12 months, and large banks continuing to lag customer-friendly credit unions and community banks, which notched average scores of 821 and 778, respectively.
At the bottom of J.D. Power's list were Bank of New York Co., which sold its retail business to JPMorgan Chase & Co. last year; North Fork Bank, which is now part of Capital One Financial Corp., and Sovereign Bank.
Representatives from Capital One and Sovereign did not respond to requests for comment. A JPMorgan spokesman said that, since buying Bank of New York in October, it has refurbished the branches and added staff to improve the customer experience.
