For a fourth consecutive year, customer loyalty and perceptions of brand image among retail banking customers continue to decline, primarily due to low marks in customer service, according to the J.D. Power and Associates 2010 U.S. Retail Banking Satisfaction Study.

“As retail banking customers become
considerably less loyal, banks need to
focus on getting the fundamentals right.”
— Michael Beird,
J.D. Power

Results of the study show that poor customer service is the most common reason why customers switched banks so far this year. Poor customer service is cited by 37% of customers who have changed their primary bank in 2010.

Fees continue to have a major impact on customer loyalty, as 29% of customers who switched banks in 2010 cite high fees for products or services as their reason for switching.

The percentage of customers who say they “definitely will not” switch banks during the next 12 months has decreased significantly during the past three years to 34% in 2010, compared with 46% three years ago in the 2007 study.

The gap in loyalty intent between customers of larger and smaller banks is considerable, with 41% of customers at smaller banks who say they “definitely will not” switch, compared with 32% at larger banks.

The study also found that 51% of customers in 2010 indicated a preference for online banking, an increase from 45% in 2008. In addition, 7% of customers report using a mobile device to execute such transactions as checking balances, transferring funds and paying bills.

J.D. Power and Associates handed out awards to the banks in 11 different regions that achieved the highest scores in its study. Arvest Bank had the highest overall satisfaction score of any bank in the country, and the only one to top the list in two separate regions (South Central and Southwest).

The Chase/WaMu merger clearly had an impact on how customers felt about the bank. It was ranked last in three regions — California, New England and the Northwest — all areas where the once-popular WaMu had a strong branch presence.

One thing to note about the winners (and losers) below: Regional players seem to have an edge.

California

• Winner: Bank of the West
• Last Place: Chase/WaMu

Florida

• Winner: BankAtlantic
• Last Place: Bank of America

Mid-Atlantic

• Winner: Northwest Savings Bank
• Last Place: Citibank

Midwest

• Winner: Commerce Bank
• Last Place: Charter One

New England

• Winner: Eastern Bank
• Last Place: Chase/WaMu

North Central

• Winner: Flagstar Bank
• Last Place: Bank of America

Northwest

• Winner: Sterling Savings Bank
• Last Place: Chase/WaMu

South Central

• Winner: Arvest Bank
• Last Place: Bank of America

Southeast

• Winner: United Community Bank
• Last Place: Bank of America

Southwest

• Winner: Arvest Bank
• Last Place: KeyBank

Texas

• Winner: Frost National Bank
• Last Place: BBVA Compass Bank

The 2010 U.S. Retail Banking Satisfaction Study is based on responses from nearly 48,000 participants regarding their experiences with their banking provider. The study analyzes customer satisfaction with the retail banking experience based on six factors: account activities, account information, facility, fees, problem resolution and product offerings. The study was fielded in January and February 2010. You can download the entire study’s results here.

“When the man came into the bank…dressed in a knit cap on one of the hottest days of the year, Nicholson [a bank teller] says he was immediately uneasy. The suspicious-looking man walked in and out of the bank, then got in the teller line, then stepped out of line.”

This excerpt comes from a Seattle Times story about a teller who was fired for foiling an attempted bank robbery.

Here’s what happened. A would-be robber handed a bag to Jim Nicholson, a two-year teller with KeyBank, and demanded it be filled with money. Nicholson “threw the bag to the floor, lunged toward the robber and demanded to see a weapon. Surprised, the would-be bank robber backed up and then bolted.”

Key Questions: Who demands to have someone shove a gun in their face? Doesn’t Nicholson have a mother/brother/wife/child? And what would have happened if the robber — already irritated by a non-compliant employee — had been forced to brandish his weapon?

Then Nicholson pursued the man for several blocks before knocking him to the ground, holding him until police arrived.

Reality Check: Brave, but foolish.

KeyBank fired Nicholson shortly after.

This situation illustrates a series of intertwined points about service, security and training.

First, when a suspicious person enters your branch, you don’t sit back and wait for them to rob you. In KeyBank’s case, Nicholson had ample cues and more than enough time to intercept the robber before things escalated. What was he waiting for? Instead, Nicholson should have stopped whatever he was doing, walked up to the person, shook his hand and said, “Hello! Welcome to KeyBank. Are you here to open an account, or is there anything else I can help you with today?” As The Financial Brand has previously noted (here, and again here), this completely throws a would-be robber off his M.O.: “Crap! I’ve been noticed. They’re on to me.”

“If a person is a legitimate customer, they will experience superior service,” says FBI Special Agent Larry Carr. “If their intention, however, is to rob the bank, they will experience paranoia, anxiety and a desire to escape.”

Robbers expect to encounter the same level of predictably-indifferent, emotionally-detached service from one financial institution to the next. In fact, they are counting on employees to do exactly what most have been trained to do — acquiesce. But when the situation presents developments that the robber didn’t anticipate, he/she simply doesn’t know how to respond. In fact, it confuses some robbers so much that employees have actually been able to get the potential robber to open an account.

This isn’t a perfect security system; there isn’t such a thing. But for all the security measures financial institutions put in place to mitigate the severity of robberies — cameras, bullet-resistant glass, man traps, dye packs, etc. — it’s completely baffling why more don’t teach this basic robbery prevention technique (PDF).

Have you ever heard of any other security measure that’s so effective it can thwart the same robber twice in one day at two separate banks? What other security measures can you think of that actually stops robberies before they take place?

Bottom Line: The KeyBank brand is suffering a public lynching. The story at The Seattle Times has received over 650 comments, and almost all of them rip into KeyBank harshly. It seems the vigilante in folks — our inner Rambo — wants to root for Nicholson and condemn KeyBank, even though KeyBank’s policy is as straightforward as it is common: they expect staff to comply with robbers’ demands inasmuch as it avoids violent confrontations. In this situation, confrontation wasn’t necessary; it was completely avoidable. For risking the lives of his co-workers, his customers, himself and innocent bystanders on the street, KeyBank was probably right to fire Nicholson. Having service mavericks — like Southwest Airlines does — is one thing, but having security mavericks is another. When it comes to people’s safety, you can’t have employees picking and choosing which rules they should follow.

Key Takeaway: Saying “hi” to suspicious people = security + service. This applies equally to shoplifters and department stores as it does armed gunmen and banks.

KeyBank should teach its tellers what could be done differently — besides just meekly complying with the robber after the robbery is initiated. Unfortunately, the message most KeyBank employees will likely get is “do what you’re told” when given instructions by KeyBank Corporate…or by a robber. If you don’t, you’re fired.

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October 2008 was one of the roughest ever for the financial industry. Now that October has passed (and thankfully so), let’s take a minute to look at some of the ads banks and credit unions ran as the global financial crisis developed.

US Bank – “Roots”

The headline on this full-page ad from US Bank is awkward. The periods in “U.S.” and the overuse of the word “bank” make the headline choppy. Simply using “Bank Solid” would have been enough. Readers understand the implicit call to action: “You should be banking at US Bank.” That’s why advertisers advertise.

The artwork is visually captivating and the metaphor is relevant, although there isn’t a strong connection between the ads’ components (headline, artwork and offer). It feels a little slapped-together, which it probably was. It’s not until you get to the first sentence of the body copy (people read ad copy?) that the “roots” connection is made. The copy also promises a “guaranteed rate of return” on CDs, something BofA has started emphasizing in its ads as well.

Including product offers in your “safe and sound” message is smart. It doesn’t seem practical to run a pure image ad right now — one whose purpose is to simply reassure customers. That kind of ad doesn’t really work to build the brand as much as it “stops the bleeding.”

KeyBank – “Proven Over Time”

Any bank could run this ad. All you have to do is change the year in the first sentence of the body copy and swap out logos.

Banks run ads like this all the time. Some banks even run this kind of ad one day, then fail the next. People read this kind of stuff and roll their eyes. Why not provide more proof for the otherwise unsubstantiated claims like “proven over time” and “well-capitalized?” If you’ve got a cap ratio worth bragging about, why not explain it to people? And don’t use the excuse, “They don’t care,” or, “They won’t get it.” The typical American consumer isn’t as dumb or disengaged as you think. She is your wife, or your dad.

Using Moody’s and S&P as “proof” of your safety and soundness won’t fly with those who have been paying attention to financial news lately. These ratings’ agencies are the same bozos who gave triple-A grades to all those toxic subprime mortgage-backed securities.

Sterling Savings – “Really Boring”

This ad is great. Sterling is mixing product offers with its “safe and sound” message. The irony is that the bank says it is boring and predictable without being boring or predictable. This ad shows how you can convey a “safe and sound” message without having to surrender any sense of personality your financial institution may have. Temporarily renaming products “The Really Boring [X]” is brilliant.

Power Financial – “No Bailout Needed”

This ad for Power Financial from the marketing folks at Shared Idiz shares a similar strategy with Sterling Savings. The ad introduces the “safe and sound” message in a way that connects with people on a visceral level; things like corporate jets really rub the average American consumer the wrong way.

Again, it’s smart to include product offers. This is one of the few ads out there promoting lending (home equity and auto) as part of the “safe and sound” strategy. As previously noted at The Financial Brand, saying you’ve got money to lend in the middle of a credit crisis is one of the most effective ways to differentiate your financial institution while suggesting you’re healthy and strong.

WaMu + Chase = “Peace of Mind”

The headline on this ad from WaMu raises one big, implicit question: Didn’t WaMu checking accounts come with peace of mind before the takeover? It’s the word “now” that triggers the scrutiny. You wouldn’t wonder what was previously wrong with WaMu if the headline simply read, “Free checking. With free peace of mind.”

The body copy in this ad is pretty good. Too bad no one reads ad copy anymore though. If you’re one of the few who does, click on the ad to enlarge it.

ING Direct – “Manifesto”

As usual, ING Direct is taking its own unique direction on the financial crisis. Recognizing the public’s shift from credit-based spending to thrift-based savings, ING Direct is seizing the opportunity to tell its brand story in one of the most unique ads ever to come from a financial institution.

Netbanker reports that over 5,300 people have gone online to “sign” this “manifesto” at a special wethesavers.com microsite from ING Direct.

Tip of the Hat: To my dad, for mailing all but one of these ads to me.

There’s much talk about Web 2.0 and social media in the financial space these days. Often, you get the impression that you’re failing if you don’t have a MySpace page, a Facebook account, a blog, a Twitter account, etc.

Reality Check:

• Most people don’t want to hang out at a website created by a bank or credit union. There are very, very few examples to the contrary.
• Financial institutions grossly underestimate the immense amounts of time, energy and money it takes to create even a semi-successful Web 2.0 presence.
• Web 2.0 is all about creating content and engagement. What can you offer (and to whom?) that isn’t already available somewhere else in a better, bigger, or more well-known online venue?
• Don’t listen to anyone who mandates a specific Web 2.0 tool for your financial institution. Web 2.0 tools are simply a means to an end. They are not the only way to reach Gen-Y. There are other ways to reach the same audience.

The Make/Buy Decision

Building your own Web 2.0 presence from scratch isn’t the only option. You can successfully “draft” off someone who already has an established online reputation.

For example, take KeyBank. They teamed up with Etch-a-Sketch sensation and YouTube celebrity George Vlosich. This viral, time-lapse video shows the Etch-A-Sketch portrait of NBA star Carmelo Anthony as it was being drawn.

More than a million viewers have seen the KeyBank video on sites across the internet. The campaign won top honors at this year’s ABA awards ceremony.

If KeyBank set out to produce its own viral video, what would they have made? And how many people would have watched it?

Here’s another example: Citibank’s recent sponsorship of the popular Aussie entertainment website, ninemsn.

And then there’s Forum Credit Union, based in Indianapolis, who sponsors the Colts Fan Forum, an interactive subsection of the official NFL Colts.com website. The forum boasts 1,673 topics with 42,147 comments from its 9,395 members.

The site says there are over 1,500 active members. There were over 150 registered users online at the time this article was written. That’s 150 opportunities in one day to expose users to a Forum Credit Union marketing message as each one signs in. Not to mention the opportunities presented as each new user signs-up.

Reality Check: The NFL’s Colts might be able to get 10,000 fans at a website to a talk about something they are deeply passionate about. If you build your own Web 2.0 presence, how many people do you think you can draw? You don’t have Peyton Manning, so what do you have to offer?

Tips & Advice

If you’re going to partner with an existing, established online success, here are some tips:

1. Think locally.
   Whether you’re a huge regional bank or a small town credit union, you want an online community that covers your geographic area and not much more. You want to minimize “waste” just like you would with any media. You don’t buy TV channels in markets you’re not in, so why would you do something similar online? Pick the right partner and you’ll make sure you’re reaching the right audience.
2. Negotiate an exclusive.
   If you can’t be the only marketer tied to the website, event, etc., at least ensure you’re the only financial institution.
3. Someone needs to own it.
   There are no easy solutions. You can’t just write a check and expect big results. To maximize your opportunities, someone needs to be answering questions, representing your financial institution and interacting with the online community you’re sponsoring. Your logo gets you halfway to first base. Your people, your presence and your participation are what make you a well-respected member of an online community.  (Note: It will probably require at least 20 hours a week.)
4. Be creative.
   In what ways can you participate? A special profile in the community? What freebies can you offer? Where does your logo go? Banner ads? Email marketing? Can you sponsor a special section of the community? What can you do offline? How can you promote your relationship with the community to a broader audience?
5. Understand your motives.
   If you’re looking to build business, you’ll have to make sure your partner gives you opportunities to do more than slap a logo in a few places. You might be creating tons of “engagement,” but if it doesn’t help drive new business with your organization, you seriously need to ask yourself: “Why are we doing this?” You could certainly partner with an online community for purely altruistic motives. If that’s the case, just be clear with everyone on your team that it’s a CSR initiative. People in your organization need to know what to expect. Otherwise, someone will throw it back in your face someday and your partnership will get the axe.

Bottom Line: Establishing a significant, respected and credible online presence by teaming-up with a website, forum, venue or personality that already has a community of followers can take a lot less time and energy than trying to create something from scratch. Of course it will cost more, but it’s about as close to a shortcut as you’ll find. And it still takes a lot of energy (read: “manpower”) to successfully support it.