Customer satisfaction with Canadian banks increases

Overall customer satisfaction with retail banks in Canada has improved from 2009, as Canadian banks have increased investment in technology and customer service systems improvements following the global financial crisis, according to the J.D. Power and Associates 2010 Canadian Retail Banking Customer Satisfaction Study.

Overall satisfaction with primary financial institutions averages 730 on a 1,000-point scale in 2010-up 9 points from 721 in 2009(1). With minimal exposure to the global financial crisis, many Canadian banks have reported strong quarterly earnings in 2010, and have increased their business expansion efforts, including investment in technology and customer service.

“In order to maintain their respective competitive advantages, Canadian banks are acquiring new assets in Canada and foreign markets,” said Lubo Li, senior director of the financial services practice at J.D. Power and Associates. Toronto, in a press release. “These banks are also adopting new customer service standards and processes to improve customer experiences across all channels-ranging from in-branch to online-which has resulted in the overall increase in customer satisfaction in 2010.”

Fueled by the introduction of Tax Free Savings Accounts and rapid growth of the discount brokerage channel, Canadian banks have significantly expanded their penetration in the wealth management business. In 2010, 48 percent of customers indicate they hold investment accounts at their primary financial institutions, compared with 36 percent in 2009. In addition, customer satisfaction with the investment accounts at their banks has also improved, with the rate of improvement being notably higher among Big 5 banks.

The study finds that achieving high levels of overall satisfaction has a strong positive effect on bank customer loyalty and commitment, as well as share of wallet. Among customers with high levels of satisfaction (averaging 849 and higher), approximately three-fourths indicate they “definitely will” recommend their primary financial institution and use it for additional banking services. Among customers with low levels of satisfaction (averaging below 601), these figures decline to 8 percent and 12 percent, respectively.

“Not only are highly satisfied customers more likely to stay with their banks longer than are less-satisfied customers, they are also more likely to entrust a greater percentage of their deposit and investment dollars to their primary financial institution,” said Li. “In addition, there is a distinct positive relationship between satisfaction levels and the number of products a customer holds at his or her primary bank.”

Now in its fifth year, the study examines customer satisfaction with their primary financial institutions in three segments: the Big 5 banks, mid-size banks and credit unions. In all segments, customer satisfaction is measured across six factors (listed in order of importance): account activities; product offerings; account information; facility, fees; and problem resolution.

TD Canada Trust ranks highest in overall customer satisfaction among Big 5 banks for a fifth consecutive year, achieving a score of 748. TD Canada Trust performs particularly well in all six factors driving overall satisfaction.

Among mid-size banks, President’s Choice Financial ranks highest for a fourth consecutive year, with a score of 771. President’s Choice Financial performs particularly well in five of the six factors: account activities; product offerings; account information; facility; and problem resolution.

The study finds that although overall satisfaction has increased from 2009, loyalty intent among retail banking customers has decreased slightly in 2010. This suggests that as the market has become increasingly competitive and customers have been provided with more choices, they have become less committed to their primary banks and are willing to reevaluate their bank relationships.

“Although financial institutions are doing a fairly good job of satisfying customers, there is still opportunity for improvement, particularly in the areas of product offering and communicating about new products,” said Li. “Optimizing and enforcing basic service standards-such as reducing call centre and in-branch wait times, addressing customers by name and thanking them for their business-are often overlooked by many banks but have a significant positive impact on satisfaction.”

The study also finds that consistent performance of key service practices has a notable positive effect on overall satisfaction. Overall, retail banks perform well in certain practices-such as providing customers with problem-free experiences-but are less successful in other areas, such as reducing in-branch transaction completion times to less than four minutes. In particular, Big 5 banks have opportunity for improvement in reducing in-branch wait times and call centre hold times. Mid-size banks face challenges in having a sufficient number of amenities offered at branches, while credit unions have opportunity to improve the accessibility of their service channels.