Bank Customer Satisfaction is on the Rise

Overall satisfaction with the retail banking experience has increased considerably since 2006, according to the J.D. Power and Associates 2007 Retail Banking Satisfaction Study^SM.

Since 2006, the overall satisfaction index has risen 22 index points to 763 on a 1,000-point scale. Greater satisfaction with fees, convenience and transaction methods appear to be driving the upswing.

“Customers provided three primary reasons for selecting a bank—good reputation, free services and convenient location,” said Jeff Taylor, senior director of the banking practice at J.D. Power and Associates. “Reputation, which is supported by recommendations and positive word of mouth, was the reason cited most often for choosing a bank.”

The 2007 Retail Banking Satisfaction Study is based on responses from 20,898 households regarding their experiences with their primary banking provider. The analysis was based on six factors: transactions, account initiation/product offerings, account statements, convenience, fees and problem resolution. The results by region were:

Mid-Atlantic Region

1. Commerce Bancorp (828)
2. Community Bank (808)
3. Washington Mutual (786)

Midwest Region

1. Washington Mutual (802)
2. Marshall & Ilsley Bank (762)
3. Comerica Bank (760)

Southeast Region

1. Bank of America (784 )
2. Wachovia (780)
3. First Tennessee (773)

Southwest Region

1. Woodforest National (790)
2. Wachovia (774)
3. Washington Mutual (762)

West/Pacific Region

1. Washington Mutual (774)
2. Bank of the West (763)

“With nearly 85 percent of customers still doing some of their banking at a branch, regional leaders have done particularly well in offering more convenient hours of operation and branch locations,” said Taylor. “While larger banks are certainly making strides in enhancing the retail banking experience, community banks and credit unions are still strong players, as they generally provide shorter in-person transaction times, fewer out-of-service ATMs, and shorter wait and transaction times when customers speak to a live telephone operator. However, community banks and credit unions tend to struggle with convenience, so increasing satisfaction within this area is surely one way for larger banks to remain competitive in the market.”

The bottom line: With large banks focused primarily on convenience and price, small banks and credit unions can compete by providing a superior customer experience.