J.D. Power released the its annual Retail Banking and Satisfaction Study this week, and the results are somewhat surprising. In a year of continued economic hardship, rising checking account fees and shrinking bank services, overall customer satisfaction with banks has actually risen slightly:
The study, now in its sixth year, finds that retail banking customer satisfaction has improved by four index points from 2010 to an average of 752 (on a 1,000 point scale) in 2011. Satisfaction with most factors of the retail banking experience—account information; facility; problem resolution; and product offerings—has improved from 2010, while satisfaction with account activities has remained stable.
So what gives? How can consumer satisfaction be rising even as fees jump and banks cut formerly free services? As I've said before in this space, I think personal finance writers focus more on fees than customers do. J.D. Power director of banking services Michael Beird adds a new twist to that theory. Beird says customers care more about how fees are handled than the absolute level, or price tag, of fees. He says customers don't seem to mind paying higher-than-average fees for checking accounts if their bank meets three criteria:
- Fees are calculated in a transparent and understandable way.
- Fees are stable, meaning they're not fluctuating so much it's hard to keep track of them.
- Customers feel like they're getting some kind of value in exchange for those fees.
To Beird, customers are saying, "If I know the rules of the game, and I know what I'm going to see when I play the game, just don't change the rules on me."
Accordingly, the banks that did rush to raise fees in order to recoup profit margins trimmed by the new federal regulations suffered in the J.D. Power rankings:
Satisfaction with fees, however, has decreased considerably from 2010, even though the proportion of customers who report they were charged fees by their bank has declined from 53 percent in 2010 to 43 percent in 2011. The primary driver of the decline in fee satisfaction has been changes in how fees are assessed, with 18 percent of customers in 2011 saying their fee structure had changed during the past 12 months, compared with 16 percent in 2010. When fee structures are changed, overall satisfaction decreases by an average of 84 index points.
Still, there's more to banking than fees, and overall customer satisfaction was also helped by an industry move toward more personalized, high-touch service, says Beird. From the report:
In particular, satisfaction with in-person branch interaction, product offerings and account information have all improved significantly. In addition, customer perceptions regarding their bank’s brand reputation and image have improved in 2011 for the first time since 2008.
Beird says that regional and community banks seem to have the edge as far as personalized service goes, but that larger banks, such as Regions Bank, seem to be catching on.
The study also found mobile banking coming into its own. Nearly a quarter of Gen-Xers and Millennials now use mobile banking, and adoption among users over 40 has doubled in the last year, says Beird. I think that trend will continue as more people get smartphones going forward.
So what do you think? Do you agree with Beird that service and the way fees are handled are more important to you than how a bank's fees compare to competitors' fees? Are you more comfortable with mobile banking now than in the past?