Canadians Less Satisfied With Their Banks
Canadian consumers aren’t happy with retail banks. Irritated by fees and concerned about reliability of banks, satisfaction scores are sagging.
Overall customer satisfaction with banks in Canada has declined this year, due largely to irritations caused by fees, according to the J.D. Power & Associates "2012 Canadian Retail Banking Customer Satisfaction Study" released today.
The primary cause of these souring statistics? An increase in changes to fee structures. 27% of customers said they were subjected to fee changes, compared with only 17% in 2011. Overall satisfaction with fees has dropped 4.1% since last year.
Satisfaction Scores Drag Loyalty and Advocacy Down Too
Any decline in satisfaction scores directly impacts loyalty and advocacy metrics, both of which have dropped year over year across Canadian banks. Compared with 2011, advocacy (the percentage of customers who say they will "definitely" recommend their bank to family and friends) had declined by five percentage points, while customer loyalty (the percentage of customers who say they will "definitely" reuse their bank in the future) declined by four percentage points.
Loyalty and advocacy rates were also negatively affected by consumers’ eroding perceptions of their bank’s brand image stemming from concerns over reliability and financial stability.
"Not only are customers frustrated with changes to their fee structure, but many are also confused by the changes, leading to the lower satisfaction," said Lubo Li, senior director of the financial services practice at J.D. Power. "Banks could try to offset the dissatisfaction with these changes by proactively communicating with their customers and ensuring that they fully understand what the changes are and why they are occurring."
Impact of Customer Satisfaction on ROI
| High Satis. (800+) | Med. Satis. (<799) | Low Satis. (<599) | |
|---|---|---|---|
| Intended Retention (% definitely will not switch) | 70% | 40% | 15% |
| Intended Advocacy (% definitely will recommend) | 59% | 20% | 5% |
| Intended Loyalty (% defintiely will reuse) | 63% | 27% | 8% |
| Commitment (% high commitment) | 61% | 20% | 4% |
| Number of Products with Primary (mean) | 5.3 | 4.7 | 4.2 |
| Average Share of Deposit Balance with Primary Bank | 86% | 79% | 74% |
| Average Share of Investable Assets with Primary Bank | 69% | 62% | 57% |
| Average Share of Borrowing Accounts with Primary Bank | 68% | 61% | 55% |
With consumers increasingly focused on digital channels, it is even more critical that banks’ websites satisfy customer needs. However, online satisfaction has declined by eight points in 2012 -- a major cause for concern. Online satisfaction is down primarily due to lower scores for "ease of navigating website" and "range of services performed online."
The study also finds that despite the shift to digital channels, branch locations continue to be an important driver of satisfaction. J.D. Power says banks need to focus on ensuring tellers and representatives are not only courteous to customers, but also equipped to address all of their needs. Simple touches and amenities -- such as complimentary reading materials, beverages and TVs -- are a cost-effective way to achieve gentle lifts in branch satisfaction.
Study Which Banks Are Strong, Which Are Weak and Where
The J.D. Power study, now in its seventh year, examines customer satisfaction with their primary financial institution in three segments:
- Big 5 Banks,
- Midsize banks
- Credit unions
In all segments, customer satisfaction is measured across seven factors (listed in order of importance):
- Account activities
- Account information
- Facilities
- Product offerings
- Fees
- Financial advisor
- Problem resolution
TD Canada Trust ranked highest in overall customer satisfaction among Big 5 Banks for a seventh consecutive year, achieving a score of 769. TD Canada Trust performs well in all seven factors.
Among midsize banks, ING Direct Canada ranked highest in overall customer satisfaction with a score of 834. ING Direct Canada performs particularly well in four out of seven factors: fees, account information, account activities and product offerings. ING Direct is the dominant online banking brand in Canada.
