J.D. Power and Associates Reports: Problems and Fees Drive Decline in Overall Satisfaction With Retail Banks

WESTLAKE VILLAGE, Calif., May 28 /PRNewswire/ -- Poor problem resolution, long wait times and additional fees all contribute to an overall decline in customer satisfaction with retail banks, according to the J.D. Power and Associates 2008 Retail Banking Satisfaction Study(SM) released today.

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The study, now in its third year, finds that 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. In particular, dissatisfaction with fees is the most commonly reported problem by customers, as well as the second-most common reason for switching financial institutions. In addition, a rise in the number of problems experienced and problems that go unresolved, increases in wait times to see tellers or speak to phone representatives, and declines in the ease of accessing branches all contribute to the drop in satisfaction.

"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 J.D. Power and Associates. "With customers experiencing more problems, longer wait times and more fees, that negative view is intensified."

The study also finds that retail banks that provide high levels of customer satisfaction have more highly committed customers, which are essential to financial growth. Increasing by even 5 percent the number of customers who are highly committed can lead to incremental deposit growth of 3 percent 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," said Clancy. "But now is the time for banks to really differentiate themselves from competitors by focusing on customer service and convenience. Banks with higher levels of customer satisfaction will generate higher deposit growth and achieve better financial results over the long term."

A new dimension of this year's study is analysis of consumer-generated online conversations regarding retail banking -- related issues conducted by J.D. Power and Associates' Web Intelligence Research, Powered by Umbria(SM). While banks are a relatively frequent topic of conversation among the online consumer community, most of the conversation revolves around consumers' daily activities regarding banking rather than national issues such as sub-prime lending. This further indicates that overall ratings of banks provided by respondents for this study are most often driven by personal experiences. Increased fees and increased annual percentage rates were the most-discussed concerns in online posting.

Analysis of online conversation between August 2007 and March 2008 also finds that nearly 80 percent of customer sentiment toward banks is positive. While the average number of mentions per institution was slightly fewer than 10,000, the three brands mentioned most frequently -- Bank of America, Chase Bank and Citibank -- represent more than one-half of the total mentions.

The study analyzes customer satisfaction with the retail banking experience through six factors: transactions, account statements, account initiation/product offerings, convenience, fees and problem resolution. Study results by region are:

Mid-Atlantic Region: Commerce Bank (Bancorp) ranks highest in the region with a score of 781 points, performing particularly well in convenience. First National Bank of Pennsylvania (764) follows in the regional rankings. Midwest Region: Commerce Bank (Bancshares) ranks highest in the region with a score of 750, performing particularly well in statements. WaMu (742) and Comerica Bank (739) follow in the region. Southeast Region: BancorpSouth Bank ranks highest with a score of 782, performing well in the transaction factor. First Tennessee Bank (774) and WaMu (768) follow in the region. Southwest Region: With a score of 802 points, Wachovia Bank ranks highest in the region, performing particularly well in the transaction factor. Bank of America, Capital One and Zions First National Bank follow with scores of 740, in a tie. West Region: Bank of the West ranks highest in the region with a score of 772, performing particularly well in the transactions factor. Citibank (759) and Union Bank of California (746) follow in the regional rankings.

The 2008 Retail Banking Satisfaction Study is based on responses from 19,602 households regarding their experiences with their primary banking provider. The study was fielded in January 2008.

Customer Satisfaction Index Ranking Mid-Atlantic Region (Based on a 1,000-point scale) Bank Index J.D. Power.com Power Score Circle Ratings For Consumers Commerce Bank (Bancorp) 781 5 First National Bank of Pennsylvania 764 4 Community Bank 756 4 WaMu 756 4 Citizens Bank 746 4 Chevy Chase Bank 737 3 Mid-Atlantic Regional Average 730 3 Wachovia Bank 729 3 Citibank 728 3 Chase Bank 723 3 Bank of America 721 3 HSBC 719 3 National City Bank 718 3 Manufacturers & Traders Bank 714 3 Sovereign Bank 702 2 PNC Bank 701 2 KeyBank 695 2 North Fork Bank 689 2

Included in the study but not ranked due to small sample size are: Astoria FS&LA, Banco Popular, Bank of New York, Branch Banking & Trust, Capital One, First Commonwealth Bank, First Niagara Bank, Fulton Bank, NBT Bank, New York Community Bank, Northwest Savings Bank, Provident Bank of Maryland, SunTrust Bank, TD Banknorth and Valley National Bank.

Midwest Region (Based on a 1,000-point scale) Bank Index J.D. Power.com Power Score Circle Ratings For Consumers Commerce Bank (Bancshares) 750 5 WaMu 742 4 Comerica Bank 739 3 FirstMerit Bank 737 3 Chase Bank 736 3 KeyBank 735 3 Midwest Regional Average 735 3 Huntington National Bank 731 3 National City Bank 731 3 Citibank 728 3 Citizens Bank of Michigan 727 3 Harris National 727 3 Marshall & Ilsley Bank 727 3 Bank of America 724 3 Fifth Third Bank 721 2 LaSalle Bank 720 2 Associated Bank 716 2 US Bank 709 2 Charter One Bank 705 2 Wells Fargo 698 2 TCF National Bank 688 2 Regions Bank 682 2

Included in the study but not ranked due to small sample size are: Chemical Bank, Citizens Bank, Flagstar Bank, First Bank, First Midwest Bank, Guaranty Bank (Wisc.), MidAmerica Bank, Old National Bank, PNC Bank and Wachovia Bank.

Southeast Region (Based on a 1,000-point scale) Bank Index J.D. Power.com Power Score Circle Ratings For Consumers BancorpSouth Bank 782 5 First Tennessee Bank 774 5 WaMu 768 4 Fifth Third Bank 757 4 SunTrust Bank 749 3 Wachovia Bank 747 3 Southeast Regional Average 742 3 Capital One 740 3 Branch Banking & Trust 738 3 Chase Bank 729 3 US Bank 726 3 Bank of America 724 2 Citibank 724 2 Compass Bank 709 2 AmSouth Bank 705 2 Regions Bank 699 2

Included in the study but not ranked due to small sample size are: Arvest Bank, BankAtlantic, Carolina First Bank, Chevy Chase Bank, Colonial Bank, HSBC, First Citizens Bank & Trust (Bancorp), First-Citizens Bank & Trust (Bancshares), RBC Centura Bank, Trustmark National Bank, Wells Fargo and Whitney National Bank.

Southwest Region (Based on a 1,000-point scale) Bank Index J.D. Power.com Power Score Circle Ratings For Consumers Wachovia Bank 802 5 Southwest Regional Average 745 3 Bank of America 740 3 Capital One 740 3 Zions First National Bank 740 3 Citibank 738 3 WaMu 732 3 Chase Bank 727 3 Wells Fargo 717 2 Compass Bank 671 2

Included in the study but not ranked due to small sample size are: Amegy Bank, Arvest Bank, BancFirst, Bank of the West, Bank of Oklahoma, First National Bank, Frost National Bank, Guaranty Bank (Texas), International Bank of Commerce and Woodforest National Bank.

West Region (Based on a 1,000-point scale) Bank Index J.D. Power.com Power Score Circle Ratings For Consumers Bank of the West 772 5 Citibank 759 4 Union Bank of California 746 4 West Regional Average 738 3 WaMu 737 3 US Bank 713 2 Bank of America 712 2 Wells Fargo 710 2

Included in the study but not ranked due to small sample size are: Downey Savings and Loan, KeyBank, Sterling Bank and Umpqua Bank.

About J.D. Power and Associates

Headquartered in Westlake Village, Calif., J.D. Power and Associates is a global marketing information services firm operating in key business sectors including market research, forecasting, performance improvement, training and customer satisfaction. The firm'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.

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