Study: Bank fees, problems drive dissatisfaction

WESTLAKE VILLAGE, Calif. (5/29/08)--Customers' overall satisfaction with retail banks has declined, largely driven by banks' poor problem resolution, long wait times and additional fees, according to a study released Wednesday.

Overall satisfaction with the retail banking experience has decreased considerably since 2007--down 26 index points on a 1,000-point scale to 737 in 2008, said the J.D. Power and Associates 2008 Retail Banking Satisfaction Study.

The study did not include credit unions. However, the results show yet another opportunity for credit unions to tout their strengths and the credit union difference.

Dissatisfaction with fees is the most commonly reported problem by customers surveyed and the second most-cited reason for switching financial institutions, the study concluded.

Also, bank customers are experiencing an increase in the number of problems experienced and problems that go unresolved, an increase in wait times to see tellers or speak to phone representatives, and declines in the ease of accessing branches. These all contribute to the drop in satisfaction, said J.D. Power and Associates.

"Many retail banks are experiencing a decline in their brand image, especially in the current economic climate, where many consumers hold banks responsible for the current housing and mortgage crisis," said Rockwell Clancy, executive director of financial services at the research firm.

"With customers experiencing more problems, longer wait times and more fees, that negative view is intensified," said Clancy.

Those retail banks that do provide higher satisfaction levels have more highly committed customers, which are essential to financial growth, the study found. It noted that increasing the number of customers who are highly committed by 5% can lead to incremental deposit growth of 3% annually.

"As banks struggle to meet shareholder demands, the common reaction is to focus on short-term financial gains by increasing fees and reducing staff--leading to longer wait times and poor problem resolution," Clancy said.

Taking a page from what sounds like a manual in credit union philosophy, Clancy suggests banks try to "differentiate themselves from competitors by focusing on customer service and convenience."

This year, the study also analyzed consumer-generated online conversations about banking issues. Most conversations revolved around consumers' daily banking activities rather than national issues such as subprime lending. This indicates that overall ratings of banks are most often driven by personal experiences, said J.D. Power. Topics consumers discussed the most: increased fees and increased annual percentage rates.

The survey was conducted with 19,602 households on six factors: transactions, account statements, account initiation/product offerings, convenience, fees and problem resolution.

courtesy of cuna.org