Fees blamed for lower customer commitment to retail banks

first_imgDriven by declines in both satisfaction and brand image, customer commitment to retail banks has decreased in 2009, according to the JD Power and Associates 2009 Retail Banking Satisfaction Study(SM) released today. This marks a steady decline in customer commitment since 2007. Now in its fourth year, the study finds that only 35 percent of customers say they are highly committed to their retail bank in 2009, compared with 37 percent in 2008 and 41 percent in 2007. On average, highly committed customers use more products, give more referrals and are much less likely to switch to another bank, compared with customers who have lower commitment levels.”Customers reporting the lowest levels of commitment in 2009 happen to be those with deposit balances that are 15 percent higher than average,” said Michael Beird, director of the banking practice at J.D. Power and Associates. “With this in mind, it is crucial that banks take steps to address this steady decline in customer commitment, as moving just 5 percent of customers from low and moderate levels of commitment to high commitment can mean additional deposit growth of more than 2 percentage points higher than average. This is critical in an environment where 4 to 5 percent is the norm.”The study finds an increase in problems experienced by customers in 2009, as 15 percent of customers reported a problem in the past 12 months — up from 12 percent in 2007. Among customers experiencing a problem, the most frequently reported issue deals with fees, with 46 percent of customers reporting a problem in 2009. This also marks an increase from 44 percent of customers reporting issues with fees in 2008.As such, customers report lower satisfaction levels in the area of fees in 2009 — dropping 19 points compared with 2008. Fees are also the greatest driver in customer attrition, with one in three customers who switched banks during the past 12 months doing so because of higher fees. In particular, overdraft fees increased more than other types of fees, rising on average from $30 in 2008 to $35 in 2009.”Despite the increase in problem incidence, banks are making strides in resolving problems that do occur, as customer satisfaction with problem resolution has improved — up 30 points from 2008 to 527 in 2009,” said Beird. “In particular, banks are taking steps to resolve more issues at the initial point of customer contact and have reduced the number of times the customer must contact the bank for answers. Additionally, customers report higher satisfaction with the number of conveniently located branches and online transactions.”The study also finds that customer perceptions of bank brand image have declined for a third consecutive year. Low customer ratings in the areas of overall reputation, customer focus and personal service primarily drive the decrease in brand image among banks.”These findings not only reflect recent negative media coverage about the banking industry, but also the reality of staff cuts, higher service charges and the effects of bank mergers on customer perceptions and experiences,” said Beird. “The challenge that banks face is most clearly underscored by findings from the recently released 2009 Purchase Funnel Special Report, which shows that 30 percent of customers cite questionable ethics, financial instability or poor reputation as key reasons for specifically avoiding a particular institution when shopping for a new bank.”The 2009 Retail Banking Satisfaction Study also finds that despite the challenging financial market, some banks have achieved high commitment levels from more than 50 percent of their customers, which is well above the industry average of 35 percent. In addition, these banks exceed the industry average for key satisfaction measures, including convenience, fees and transactions. Customers of these banks also rate them highly regarding brand image, particularly for customer focus, personal service and financial stability.”Banks with high brand image scores typically engage in practices that focus on strong communication with customers, such as welcoming them to the branch office or following up on problems,” said Beird. “By focusing on aspects most critical to the banking experience, banks can win the favor of their customers, which can lead to considerable financial rewards.”The study analyzes customer satisfaction with the retail banking experience based on six factors: transactions; account statements; account initiation/product offerings; convenience; fees; and problem resolution. Study results by region are:Mid-Atlantic Region: TD Bank ranks highest in the region with a score of 774, performing particularly well in convenience. Community Bank (766) and Susquehanna Bank (761) follow in the regional rankings.Midwest Region: With scores of 754, Commerce Bancshares, Inc., and Harris National rank highest in a tie in the region. Chase follows with a score of 748.Mountain Region: Wells Fargo ranks highest in the region with a score of 727, performing well in account initiation/product offerings, account statements, convenience, fees and transactions.New England Region: People’s United Bank ranks highest with a score of 751, performing particularly well in convenience, account initiation/product offerings, account statements and transactions. TD Bank (746) and Wachovia (726) follow in the rankings.Southeast Region: With a score of 815, Arvest Bank ranks highest in the region and performs well in convenience and account initiation/product offerings. First Tennessee Bank (788) and First-Citizens (Bancshares) (771) follow in the regional rankings.Southwest Region: Wachovia ranks highest in the region with a score of 792, performing well in account initiation/product offerings, fees, account statements and transactions. Zions First National Bank follows with a score of 760, and Capital One ranks third with 756.West Region: Bank of the West ranks highest with a score of 749 and performs well in account statements and transactions. Wells Fargo (743) and WaMu (730) follow in the regional rankings.The 2009 Retail Banking Satisfaction Study is based on responses from 28,570 households regarding their experiences with their primary banking provider. The study was fielded in January 2009.Customer Satisfaction Index RankingsMid-Atlantic Region(Based on a 1,000-point scale) Bank Index J.D. Power.com Score Power Circle Ratings For Consumers —- —— ————- TD Bank 774 5 Community Bank 766 5 Susquehanna Bank 761 4 Citizens Bank 755 4 Northwest Savings Bank 755 4 Chevy Chase Bank 747 4 PNC Bank 744 4 SunTrust Bank 743 4 WaMu 740 4 First Niagara Bank 739 4 National City Bank 738 4 HSBC Bank 731 3 Mid-Atlantic Region Average 728 3 First NB of Pennsylvania 726 3 Sovereign Bank 726 3 Wachovia 725 3 Bank of America 723 3 Chase 723 3 M&T Bank 720 3 First Commonwealth Bank 706 2 Citibank 699 2 KeyBank 698 2 Capital One 689 2 Astoria FS&LA 686 2 Included in the study but not ranked due to small sample size are: BB&T, Fulton Bank, Harleysville National B&T, Hudson City Savings Bank, Huntington National Bank, National Penn Bank, NBT Bank, New York Community Bank, Provident Bank of Maryland, S&T Bank, and Valley National Bank.Included in the Mid-Atlantic region are: New York, New Jersey, Pennsylvania, Maryland, Deleware and Washington D.C.Midwest Region(Based on a 1,000-point scale) Bank Index J.D. Power.com Score Power Circle Ratings For Consumers —- —— ————- Commerce Bancshares 754 5 Harris National 754 5 Chase 748 4 M&I Bank 746 4 Fifth Third Bank 745 4 Citizens Bank (MI) 743 4 FirstMerit Bank 743 4 Old National Bank 742 4 Comerica Bank 734 3 KeyBank 733 3 Midwest Region Average 733 3 Huntington National Bank 732 3 National City Bank 728 3 Wells Fargo 728 3 Associated Bank 726 3 Bank of America 723 3 Regions Bank 717 2 Charter One Bank 715 2 U.S. Bank 710 2 First Midwest Bank 707 2 TCF National Bank 706 2 Citibank 698 2Included in the study but not ranked due to small sample size are: 1st Source Bank, AMCORE Bank, AnchorBank, Bank Midwest, Bank Mutual, Bremer Bank, Chemical Bank, First Bank (MO), Flagstar Bank, Independent Bank, PNC Bank and UMB Bank.Included in the Midwest region are: Illinois, Ohio, Indiana, Missouri, Wisconsin, Minnesota, Michigan and Iowa.Mountain Region(Based on a 1,000-point scale) Bank Index J.D. Power.com Score Power Circle Ratings For Consumers —- —— ————- Wells Fargo 727 5 Mountain Region Average 722 3 U.S. Bank 711 2 Bank of the West 699 2 Chase 695 2 Bank of America 689 2Included in the study but not ranked due to small sample size are: Commerce Bancshares, First Interstate Bank and KeyBank.Included in the Mountain region are: North Dakota, South Dakota, Wyoming, Colorado, Idaho, Missouri, Kansas and Nebraska.New England Region(Based on a 1,000-point scale) Bank Index J.D. Power.com Score Power Circle Ratings For Consumers —- —— ————- People’s United Bank 751 5 TD Bank 746 5 Wachovia 726 3 Citizens Bank 724 3 New England Region Average 721 3 Sovereign Bank 718 3 Webster Bank 711 3 Bank of America 707 2 Citibank 694 2Included in the study but not ranked due to small sample size are: Eastern Bank, KeyBank, NewAlliance Bank and Rockland Trust Co.Included in the New England region are: Connecticut, Massachusetts, Rhode Island, New Hampshire, Vermont and Maine.Southeast Region(Based on a 1,000-point scale) Bank Index J.D. Power.com Score Power Circle Ratings For Consumers —- —— ————- Arvest Bank 815 5 First Tennessee Bank 788 4 First-Citizens (Bancshares) 771 4 BancorpSouth Bank 767 4 BankAtlantic 761 4 BB&T 756 3 WaMu 755 3 Colonial Bank 753 3 Wachovia 752 3 Regions Bank 746 3 SunTrust Bank 746 3 Southeast Region Average 746 3 PNC Bank 738 3 Fifth Third Bank 735 3 Bank of America 734 3 Capital One 732 3 National City Bank 729 3 RBC Bank 727 3 Chase 726 3 U.S. Bank 725 3 Citibank 714 2 BBVA Compass Bank 712 2 Chevy Chase Bank 680 2Included in the study but not ranked due to small sample size are: Capital City Bank, Carolina First Bank, Carter Bank and Trust, Community Trust Bank, First Citizens Bank & Trust (Bancorp), Hancock Bank, Riverside NB ofFlorida, Trustmark National Bank, United Bank, United Community Bank and Whitney National Bank.Included in the Southeast region are: North Carolina, South Carolina, Georgia, Florida, Alabama, Tennessee,Virginia, Mississippi, Louisiana, Arkansas, Kentucky and West Virginia.Southwest Region(Based on a 1,000-point scale) Bank Index J.D. Power.com Score Power Circle Ratings For Consumers —- —— ————- Wachovia 792 5 Zions First National Bank 760 4 Capital One 756 4 Chase 745 3 Southwest Region Average 742 3 Woodforest National Bank 741 3 Bank of America 736 3 Wells Fargo 735 3 Citibank 734 3 WaMu 727 3 U.S. Bank 713 2 BBVA Compass Bank 703 2 Included in the study but not ranked due to small sample size are: Amegy Bank, Arvest Bank, Bank of Oklahoma, Bank of Texas, Bank of the West, Comerica Bank, First National Bank, Frost National Bank, Guaranty Bank (TX), International Bank of Commerce, MidFirst Bank, Nevada State Bank, Prosperity Bank and Regions Bank.Included in the Southwest region are: Texas, Oklahoma, New Mexico, Arizona, Nevada and Utah.West Region(Based on a 1,000-point scale) Bank Index J.D. Power.com Score Power Circle Ratings For Consumers —- —— ————- Bank of the West 749 5 Wells Fargo 743 4 WaMu 730 3 West Region Average 729 3 Wachovia 728 3 U.S. Bank 724 3 Union Bank of California 723 3 KeyBank 718 2 Citibank 712 2 Bank of America 706 2Included in the study but not ranked due to small sample size are: Downey Savings, Sterling Savings Bank and Umpqua Bank.Included in the West region are: California, Oregon and Washington.About J.D. Power and AssociatesHeadquartered in Westlake Village, Calif., J.D. Power and Associates is a global marketing information services company operating in key business sectors including market research, forecasting, performance improvement, Web intelligence and customer satisfaction. The company’s quality and satisfaction measurements are based on responses from millions of consumers annually. For more information on car reviews and ratings, car insurance, health insurance, cell phone ratings, and more, please visit JDPower.com. J.D. Power and Associates is a business unit of The McGraw-Hill Companies.About The McGraw-Hill CompaniesFounded in 1888, The McGraw-Hill Companies (NYSE: MHP) is a leading global information services provider meeting worldwide needs in the financial services, education and business information markets through leading brands such as Standard & Poor’s, McGraw-Hill Education, BusinessWeek and J.D. Power and Associates. The Corporation has more than 280 offices in 40 countries. Sales in 2008 were $6.4 billion. Additional information is available at http://www.mcgraw-hill.com(link is external). Media Relations Contacts: Jeff Perlman; Brandware Public Relations; Agoura Hills, Calif.; (310) 589-7749; jperlman@brandwaregroup.com(link sends e-mail) John Tews; J.D. Power and Associates; Troy, Mich.; (248) 312-4119; media.relations@jdpa.comNo(link sends e-mail) advertising or other promotional use can be made of the information in this release without the express prior written consent of J.D. Power and Associates. www.jdpower.com/corporate(link is external)Source: JD Power. PRnewswire. May 19, 2009last_img

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