Big Banks Make Big Gains in Customer Satisfaction

*Guest post by Karen Licker, Financial Services Social Media & Marketing (Independent) at J.D. Power and Associates

Overall customer satisfaction with retail banks improved significantly from 2012, largely a result of improvements made by big banks, (1) according to our J.D. Power and Associates 2013 U.S. Retail Banking Satisfaction StudySM  released today.

“Many of the big banks have made great strides in listening to what their customers are asking for: reducing the number of problems customers encounter and, more importantly, improving satisfaction with fees,” said our own Jim Miller, senior director of banking here at J.D. Power and Associates

Below are a few highlights from the study:

  • Fees have begun to stabilize and banks have helped their customers better understand their fee structures.  Satisfaction in this area has begun to rebound, and is up by 14 points this year from 2012.
  • One-third (33%) of customers say they “completely” understand their fee structure, compared with 26 percent in 2012.
  • Fees also have been a major source of customer problems and complaints. The stability in fees, coupled with banks placing more emphasis on preventing problems, has lowered the proportion of customers experiencing a problem by 3 percentage points year over year, to 18 percent in 2013.
  • While customers appreciate the personal service they receive at their branch, such transactions are slowly declining, while the numbers of online, ATM and mobile banking transactions are increasing.
  • As banks roll out envelope-free ATM deposits and deposits by mobile phone, customers are finding it easier to handle routine transactions without needing to visit their branch.

“Successful banks are not pushing customers out of the branch, but rather providing tools that make it easier to conduct their banking business when and where it is convenient for them,” said Miller. “Customers are quickly adopting mobile banking, making it a critical service channel for banks, not just a ‘nice to have’ option.”

For study results by region, view retail banking satisfaction rankings at JDPower.com

For more information on this 2013 U.S. Retail Banking Satisfaction Study, please contact Holly Zagresky at (248) 680-6319 or via email at Holly_Zagresky@jdpa.com

(1)Big banks are defined as the six largest financial institutions based on total deposits as reported by the FDIC, averaging $180 billion and above. Regional banks are defined as those with between $180 billion and $33 billion in deposits. Midsize banks are defined as those with between $33 billion and $2 billion in deposits.

Small Business: Respect and Dedication

In a recent blog on Banking.com, we explored how small businesses don’t always get the respect they deserve from the banking world. There’s no question that this sector of the economy is always vital, and increasingly optimistic. In fact, the number of businesses that report being ‘better off’ jumped from 16 percent in 2009 to 33 percent in 2012. This is also a market rich with possibility: on average, small businesses hold deposits four times greater and loan balances 15 times greater than retail banking customers.

And yet, this market continues to rank near the bottom in banking satisfaction.  So what’s going on—and what can the industry do to make thing better? The new J.D. Power and Associates 2012 US Small Business Banking Satisfaction Study, a comprehensive research report that identifies and highlights the situation described above, digs deeper into the problems and identifies many of the pain points.

As mentioned in the previous blog, credit is still the primary issue, but it’s not the only one.  The J.D Power study lays out more fundamental problems too. In particular, while small businesses are sometimes lumped in with retail banking, there are major differences between the two.

First, small businesses expect greater competence and responsiveness from their bank, since their needs are more complex needs and they bring greater value. Second, relationships are everything: they want an account manager who understands their needs and provides customized solutions. In both these areas, the study shows, banks come up short.

In routine transactions conducted both face-to-face and on the phone, small business customers say their experience either mirrors that of retail customers or doesn’t even rise to that level. By the numbers, 21% of retail banking customers have problems in a given year; 36% of small business customers say the same. Similarly, only 43% of small business customers say their assigned account manager (if they actually have one) ‘completely’ understands their needs. The latter problem is particularly acute: the J.D. Power study outlines the ways in which a good relationship with an understanding account manager makes a significant difference in terms of discussing loan options, receiving regular updates, etc.

The problems extend past business issues to even more basic headaches. The data shows that small business customers are less likely to experience in-person best practices than retail customers when they visit a branch, are less likely to be greeted by name, and are more likely to experience longer wait times.

The study does take into account equivalent concerns on the banks’ side: It’s perhaps unrealistic to expect that every account manager will have a full understanding of every small business account they handle, and it is only natural to assign bank personnel to accounts where they offer the greatest value. However, there’s also no question that there is plenty of room for improvement here.

The study does lay out some remedies. First, while there can (and should) be some discussion around whether to have a dedicated commercial-only window in particular branches, there needs to be more training staff-wide on paying greater attention to small business customers. Second, in the era of Big Data, we have more information at our fingertips now than ever before on each account and the market in general. This should be used more effectively to develop a greater focus on this critical market segment. Finally, while many institutions fully intend to create small business specialists within call center groups—with experienced representatives and specialized training—the final product often falls short. If, as the J.D. Power study makes clear, “a dedicated small business team is established—and the data suggests it should be—it needs to be sourced and managed appropriately.”

Ultimately, of course, any list of best practices runs the risk of being too generic, the same problem that frequently afflicts this market. The small business market is undeniably both vast and fragmented. It’s also vital—and for the banking industry’s purposes, potentially very lucrative.  It deserves respect, and that will come through customized solutions backed with knowledge and dedication.

* Now in its seventh year, the U.S. Small Business Banking Satisfaction Study measures small business customer satisfaction with the overall banking experience by examining eight factors: product offerings; account manager; facility; account information; problem resolution; credit services; fees; and account activities. The 2012 study includes responses from nearly 7,246 small business owners or financial decision-makers who use business banking services. The study was fielded from August 10, 2012, through September 10, 2012

For more information about the J.D. Power and Associates 2012 US Small Business Banking Satisfaction Study, please contact: Holly Zagresky at (248) 680-6319 or via email at Holly_Zagresky@jdpa.com

Small Business: Perception vs. Reality

In the most recent election cycle, like most others before it, the one sector of the economy that got the most attention was small business.  This is the future, we were told by every candidate—the very backbone of the nation’s economic infrastructure, the greatest source of employment and innovation, the foundation of America’ greatness.

The new J.D. Power and Associates 2012 US Small Business Banking Satisfaction Study paints quite a different picture. It uncovers an environment where optimism co-exists with uncertainty, and where tapping capital resources remains an unnecessarily onerous task. Far from being lauded, this is a market  that is looking for support, deserves it, but too often doesn’t get it.

There’s no question that as the economy continues to recover, however slowly, small businesses will play a critical role. Those already in the market are on track to keep growing, and this will turn help fuel the creation of others. Indeed, the study highlights a degree of optimism in this sector.  There’s a clearly perceptible spike in the percentage of small business banking customers who report being better off now than they were a year ago. It’s still far from a majority at 33 percent, but that’s still a 10 percent jump over last year’s corresponding number, and even better news compared to the 15 percent who now say they’re worse off.

“There is a long road ahead to economic recovery, but it’s positive to see that small business banking customers report they are better off this year over 2011,” said Jim Miller, senior director of banking at J.D. Power and Associates.  “Since 2009, we have seen the percentage of those who reported to be ‘better off’ jump from 16 percent in 2009 to 33 percent in 2012.”

For banks in particular, there’s even more good news.  The JD Power study reports that, on average, small businesses hold deposits four times greater and loan balances 15 times greater than retail banking customers. The people running the businesses are doing well too: these customers carry higher levels of personal banking business than the average consumer.

And finally, there’s the profit factor. Perhaps contrary to conventional wisdom, profit margins associated with small business customers are typically higher than those associated with larger corporate banking customers.

However, the gulf between perception and reality extends into other areas as well, with less happy results.  As the JD power study makes clear, this market doesn’t get the respect it clearly merits. For the record, there is a higher level of overall satisfaction in the most recent report, but that’s still cold comfort. In fact, it still ranks near the bottom among the financial services businesses that the study covers (only mortgage servicing ranks lower). Even the credit card business, which long languished at the bottom, has now moved past small business banking in satisfaction to levels enjoyed in the retail banking sector.

The elephant in the room, of course, is credit, or rather the lack of it. Oddly, the hard numbers don’t necessarily show a decline here: 82 percent of small business loan applicants say got approved for their most recent loan, the same as the year before.  However, a recent research effort conducted by the Small Business Administration that went a level deeper revealed that lending  this sector has been falling steadily since 2008, the year of the banking meltdown. This is likely  one factor behind the declining Availability of credit rating, which is down from 6.71 (on a 10-point scale) last year to 6.65 in this year. That’s actually  one of the lowest-rated attributes in the 2012 study.

Again, all the clichés ascribed to the small business sector—hardy, entrepreneurial, innovative—are real. This is a risky proposition, and we all know just how many new ventures don’t survive. At the same time, as every good candidate will point out in every stump speech, small business is exactly what will fuel overall economic recovery.

In the next piece, we’ll look more closely at the pain points in this market. But for now, the unmistakable takeaway is that small businesses are healthier than they’ve been for a while, they’re vital for economic growth, and there are significant profit margins involved. The market is good for companies, good for individuals, and good for the economy. Given those considerations, the banking satisfaction levels identified by the new report are lamentably low, and it should be the industry’s goal to do better.

* Now in its seventh year, the U.S. Small Business Banking Satisfaction Study measures small business customer satisfaction with the overall banking experience by examining eight factors: product offerings; account manager; facility; account information; problem resolution; credit services; fees; and account activities. The 2012 study includes responses from nearly 7,246 small business owners or financial decision-makers who use business banking services. The study was fielded from August 10, 2012, through September 10, 2012.

For more information about the J.D. Power and Associates 2012 US Small Business Banking Satisfaction Study, please contact: Holly Zagresky at (248) 680-6319 or via email at Holly_Zagresky@jdpa.com

Satisfaction With Social Media Interaction

Guest post by Karen Licker, Social Banker & Content Contributor (Independent) at J.D. Power and Associates

Social media, a non-traditional method of customer interaction is clearly becoming increasingly important for banks to understand.

It’s no longer just a vehicle for customers to vent about poor experiences, praise their bank for exceeding expectations, or read about other customers’ positive or negative experiences—it has now become a legitimate service channel!

Social media sites not only allow customers to interact with their bank, but also provide another medium to converse with representatives, get questions answered, and resolve problems. For example, data from our 2012 J.D. Power and Associates US Credit Card Customer Satisfaction Study shows that during the past 12 months, 5% of credit card customers have contacted their issuer through their social media site to ask a question, resolve a problem, or make a request.

Although many questions or problems may need to be handled outside of the social media site that was the initial contact, it is important for banks to show they are listening to their customers’ “pain points” by providing an actual response to the social media posting.

Did you know that only 60% of customers who contacted their credit card issuer via social media received a reply?

Needles to say, the impact of replying to a posting on overall satisfaction is profound, as Interaction satisfaction among customers who have received a reply to their social media contact is notably higher than among those who did not receive a reply (802 vs. 748, respectively). Findings from our recent study also revealed that optimizing customer satisfaction with their social media experience does not end at merely responding to the request, but that issuers should continue to focus on the following:

  • Resolving the initial issue at hand
  • Offering additional assistance
  • Thanking the customer for their business

When each of these best practices are met, Interaction satisfaction increases to 839, which is 91 points higher than when they are not met.

Source: J.D. Power and Associates 2012 US Credit Card Satisfaction StudySM    

The Bottom Line:
With the continued advancement of technology shifting the way customers interact with financial institutions, it is vital for banks to proactively respond to the changing demands of their self-service channels and understand the importance of being responsive to feedback posted on social media sites.

 

FI Spotlight: Arvest Bank

In our latest FI Spotlight we got the opportunity to speak with Jason Kincy, Marketing Director at Arvest Bank. In our Q&A below, Jason talks to us about the J.D. Power and Associates 2012 Retail Banking Satisfaction Study, customer satisfaction and social media. Arvest Bank ranks highest both in the South Central Region and in the Southwest Region in the J.D. Power and Associates 2012 Retail Banking Satisfaction StudySM. This is the fourth year that Arvest has been recognized with a regional award. Arvest has been ranked highest in satisfaction with retail banking in the Southwest (2010, 2011, 2012), Southeast (2009) and South Central (2010, 2012) regions.

 

Q: In a few sentences, can you tell me about Arvest Bank?
A: Arvest Bank operates more than 240 bank branches in Arkansas, Oklahoma, Missouri and Kansas through a network of 16 locally managed banks, each with its own board of directors and management team. These banks serve customers in 90 communities with 12-hour weekday banking at most locations. Arvest also provides a wide range of banking services including loans, deposits, treasury management, asset and wealth management, life insurance, credit cards, mortgage loans and mortgage servicing. Arvest operates a mortgage company, asset management company, insurance division and mortgage servicing company.

Q: In the J.D. Power and Associates 2012 Retail Banking Satisfaction Study, Arvest Bank scored among the best in all categories: overall satisfaction, product offerings, facility, account information, fees and account activities. What do you attribute to your success in scoring so high on the J.D. Power Rankings?
A: No bank is perfect and we have areas that we’re working hard to improve. Arvest focuses on providing many of the banking attributes that drive customer satisfaction. We operate a way that makes banking convenient no matter how the customer defines convenience – whether that’s at an extended hours branch location, on the phone, online or via mobile banking. When we do interact with customers on a personal transaction, our associates provide an efficient and courteous experience for the customer. These interaction experiences combined with fairly priced fees and an account lineup with options for everyone combine to create a satisfied customer.

Q: Do you have any advice for FI’s looking to raise their banking satisfaction scores?
A: Every institution and market is different, but there are some general principles that banks performing highly in customer service rating generally share, so we, like many banks study customer satisfaction studies and trends to learn from the top performers. Creating value to the customer is key to their satisfaction. Arvest is very responsive to customer feedback provided in person or through customer surveys and will take action when an adjustment is needed. This responsiveness allows us to fix small issues before they become large customer frustrations and to tweak our products or services based on customer needs, which leads to happier customers.

Q: On your website, you have a “How are we doing?” survey for customers. How long have you had this survey on your site?
A: We have conducted online surveys for several years. The customer has the option to choose to provide feedback on a branch, telephone or online experience.

Q: Is it a useful tool for obtaining customer feedback?
A: Yes. We receive many surveys from customers and they are generally very transparent in their feedback. The surveys are provided to the local market where the customer does their banking so that local management can address service levels accordingly and follow up directly with the customer when appropriate.

Q: Arvest received a high score in the product offerings section of the J.D. Powers Rankings. What range of products do you offer to your customers?
A: We believe our product lineup has something for everyone, whether you want an extremely basic account or an account with total relationship value added services.  The addition of perks that are becoming more popular like family identity theft coverage has created an overall perception of value. Our checking accounts range from free with no balance requirements to fee based accounts with the options and perks customers have told us are important to them.

Q: We know mobile banking has grown by leaps and bounds over the past few years. Have you seen the same trend with Arvest customers?
A: Arvest has provided free mobile banking since late 2007 and transitioned to an improved offering in October of 2011. We have SMS/Text banking, mobile web banking and apps for iPhone and Android. Our growth over the past 12 months has been phenomenal, with our user base doubling in size. Mobile banking will continue to grow at a torrid pace and we expect it to become increasingly more integral in how customers do their banking.

Q: Let’s talk social. Arvest is on Facebook and Twitter. Do you view social channels as a good way to interact with customers?
A: Yes, it allows us to participate in communication spaces where many of our customers are. It’s another way to share your brand themes and persona.

Q: How has social media helped Arvest with customer communication?
A: Social media has allowed us to share information that doesn’t fit a traditional website such as community events, up to date announcements and consumer education. A very valuable component of social media to banks is the ability to observe customer sentiment and opinions and then apply those to maintaining quality service. Many customers will be more unfiltered with their opinion in social media than they will in a formal survey.

Q: Is there anything else you want to add?
A: Maintaining quality service requires an ongoing effort to continue to deliver on customer expectations. Even though Arvest has won multiple J.D. Power and Associates trophies over the past few years, we have a team of associates who look for weaknesses in the study to identify areas where we can improve. We also research the top performers to try and learn what makes them successful.