Customer satisfaction with Canadian retail banks up from 2010
TORONTO -- Investments in customer-facing systems and processes by the Big Five banks and midsize banks have contributed to a substantial increase in overall customer satisfaction with retail banks in Canada, according to the J.D. Power and Associates 2011 Canadian Retail Banking Customer Satisfaction Study SM released today.
Overall satisfaction with primary financial institutions averages 756 on a 1,000-point scale in 2011—up 26 points from 730 in 2010 and continuing a three-year improvement trend. Year-over-year improvements by Big Five banks (increasing by 29 points) and midsize banks (28 points) have outpaced gains achieved by credit unions (15 points.)
Improvement in the retail banking industry in Canada from 2010 is considerably greater than the four-point increase observed among U.S. retail banks in 2011 1. Furthermore, in contrast to the notable gains achieved by Canadian Big Five banks in 2011, satisfaction with large retail banks in the United States has improved by only five points from 2010.
"During the past year, all major banks in Canada have invested heavily in upgrading customer-facing systems and processes, which has resulted in higher satisfaction with account information and activities, product offerings and bank facilities," said Lubo Li, senior director of the financial services practice at J.D. Power and Associates, Toronto.
Despite these gains, satisfaction with fees and problem resolution has declined significantly across all three segments in 2011, compared with 2010. Confusion about fee structures, a higher rate of unresolved problems and a decrease in the proportion of first-contact problem resolution contribute to decreased satisfaction in these areas.
According to Li, customers can get better deals by being proactive and smart shoppers: make sure you understand fees and available discounts, focus on the quality of advice your bank is giving you, and regularly ask what new products and services your bank is offering.
When it comes to bank fees, lack of communication leads to dissatisfaction, so looking for a bank that is clear and open about its pricing is critical. The study finds that among customers who understand the value associated with a particular fee—for example, a monthly account maintenance fee that coincides with better customer service, expanded branch hours, and unlimited ABM usage—satisfaction with fees is significantly higher, compared with customers without this understanding. Customers should be aware of discounts their bank offers. Many banks offer discounts to students, seniors, or customers who hold multiple products with their bank.
Many banks offer financial advisor services to their customers, but satisfaction doesn't hinge upon whether an advisor is assigned—it's whether the quality of the advice meets customer needs. While customers who are assigned a financial advisor by their bank do indicate slightly higher levels of satisfaction, compared with customers without an advisor, if the advice received doesn't completely meet their needs, satisfaction declines considerably—by 119 points, on average. Customers of Big Five banks and credit unions are more likely than customers of midsize banks to receive financial advice from their bank; indicate the advice completely meets their needs; and give high ratings to their financial advisor.
Being aware of the wide variety of bank products available industry-wide and knowing which products are offered by one's own bank are key to customers getting more value out of their banking relationship. Product offerings vary widely among banks of various sizes, with larger banks being more likely to offer mobile banking apps, email and text alerts, money transfers via email, and other technologically enhanced services than are midsize banks or credit unions.
Now in its sixth year, the study examines customer satisfaction with their primary financial institutions in three segments: the Big Five banks, mid-size banks and credit unions 2. In all segments, customer satisfaction is measured across six factors (listed in order of importance): account activities; account information; product offerings; facility, fees; and problem resolution.
TD Canada Trust ranks highest in overall customer satisfaction among Big Five banks for a sixth consecutive year, achieving a score of 780. TD Canada Trust performs well in all six factors that drive overall satisfaction.
Among mid-size banks, President's Choice Financial ranks highest for a fifth consecutive year, with a score of 786. President's Choice Financial performs particularly well in three of the six factors: fees, account information and product offerings.
The study finds social media is increasingly emerging as an alternative to traditional retail banking channels. More than 60 per cent of retail banking customers indicate they use social media. Among customers who use social media for banking purposes, 24 per cent indicate they use it to discuss their banking experience or inform their bank of a customer service issue.
"Use of social media outlets to contact financial institutions is still in the initial stages of growth, but early indications show that use of this medium is likely to increase in the coming years," said Li. "Financial institutions have an opportunity to use everything that social media has to offer in order to improve both sales and service by gaining a deeper understanding of customer wants, needs and expectations. This level of understanding may be used to improve not only the experience and brand messaging, but also to inform customers of new products."
The 2011 Canadian Retail Banking Customer Satisfaction Study is based on responses from 12,740 customers who use a primary financial institution for personal banking. The study includes the largest financial institutions—banks and credit unions—in Canada and was fielded in March and June 2011.