Consumer Confidence in Their Bank

In third quarter, The MSR Group’s National Banking Study reported an undercurrent of insecurity among US consumers.  In fourth quarter, a section was added to the survey to determine if the level of concern during third quarter was an escalating issue or simply a reaction to the unprecedented events occurring during that time period.

The results were somewhat surprising: At a time when the nation’s banking system has been hit with numerous closures and uncertainties, consumer confidence is holding steady.  The national study, which surveys 2,400 banking customers nationally by telephone each year (600 interviews each quarter) indicates that most consumers report confidence in their primary bank to be “about the same” as it was a year ago.  Two out of three consumers surveyed in fourth quarter say they are “very confident” in their bank (top box) while 15.7% express a lack of confidence (bottom 2-box).

Although the big picture implies consumers have faith in the banking system, a closer look reveals geography and size of bank impacts confidence levels.  Consumers living in states closest to Wall Street report significantly higher levels of uncertainty than those in the rest of the country.  Twenty-two percent of consumers in the Northeast and 17.6% of those in the West have “a little” or “a lot” less confidence today compared with 8.9% of those who live in the South and 10.2% in the Midwest.  The proximity to America’s finance epicenter may have played a part in changing the perspective of Northeasterners when considering their banks; sixty percent of them say they have the same level of confidence today as a year ago compared with 71-72% in the other three regions.

Confidence levels also vary with the size of financial institution; larger banks are causing more concern among customers than smaller banks or credit unions.  Nearly 82% of regional and community bank customers and 85.5% of those who bank at credit unions say they are “very confident” in their bank, while fewer than 70% of national and super-regional bank customers report feeling that way.

Approximately one in four customers of regional/community banks and credit unions state they have more confidence in their bank today compared to a year ago.  That compares with only 10% of customers at the nation’s largest banks.  In fact, 22% of customers at these large banks report being less confident today than a year ago.

Large Banks Post Significant Improvements in Customer Experience

In spite of customers’ concerns over their stability, large national and super-regional banks posted significant gains over the previous quarter in areas related to customer experience. Overall facility and service ratings rose in 2008.

In fact, the increased emphasis on customer satisfaction and service quality is paying dividends in the form of higher quality ratings and advocacy for banks of all sizes.  Customer ratings of branch service quality increased significantly in 2008.  The upward trend in branch service quality comes from increased ratings of:

• Branch appearance
• Teller helpfulness
• Promptness of service
• Attention by the teller
• Accuracy of transactions
• Friendliness
• Professional appearance
• Likelihood to open additional accounts

Customers rate the bank they consider their “primary bank,” which may be a large national bank, a regional or community bank, or a credit union.

Overall, the survey results show that investments to improve customer service and building relationships reap benefits in terms of retention of existing customers, increased share of wallet, and ultimately greater profitability.

Ancillary Service Lines

Overall satisfaction with call centers remains high with an index score of 89.9.  Seventy-eight percent of call center customers report that their issue was resolved during the first call.

Fifty-four percent of banking customers report using an ATM machine in the last 30 days. This percentage has remained unchanged since fourth quarter 2006 when tracking began. The trend for online banking is very different. Forty-six percent of customers report using their bank’s online service in the last 30 days, 15% higher than at the beginning of 2008.
Use of various online services remains the same.

• 93% check balances or transfer funds
• 65% use online bill pay
• 39% order checks
• 8% access their online account from a cell phone

Comparison of Overall Service Quality Index Scores by Service Line Year End 2008 (n=1855)

Branch	Call center	ATM	Online
88.5	84.9	80.0	83.4

Share of Wallet

Retail banking customers have a myriad of choices when it comes to providers of loan and investment products. A customer’s willingness to bring additional business to his or her bank in a competitive environment is the penultimate marketing achievement. We know that investments in bundled products, messaging, and increased service levels are important, but a critical question is: Who should banks be targeting with these efforts.

A recent study suggests that segments in The MSR Group’s Advocacy Profile* differ significantly in share of wallet characteristics. The results provide a strong argument for investments in building customer loyalty and advocacy that will pay dividends in increased share of wallet.

Consumers who are Advocates according to The MSR Group’s Advocacy Profile have significantly more products with their primary bank compared to those in the other advocacy categories, making them more valuable customers overall.

Further, Advocates are more likely to have a higher percentage of their total banking business with their primary bank compared to customers in the other advocacy categories.  What is surprising is the 9% “gap” between Loyal customers and Advocates compared to the gaps between other segments.  Banks that succeed in turning loyal customers into advocates stand to reap benefits in both increased share of wallet and positive word of mouth advertising from this valuable customer group. 

*The MSR Group’s Advocacy Profile: The percent of the US banking customers who are “Advocates” (extremely loyal and willing to tell friends/relatives about their bank), the proportion who are “Loyal” (very satisfied but won’t necessarily tell others), the percentage who are “At Risk” (dissatisfied and considering looking for a new bank) and those who are “Critical” and probably leaving their current bank soon.  The NAR is calculated by subtracting the percent of customers in the At Risk and Critical categories from the percent of customers in the Advocate category.

Leading Customer Experience Monitoring Tool Improves for 2009

The MSR Group has released version 2.09 of the Performance Monitor (the online reporting tool for the company’s proprietary APECS® customer advocacy measurement system).  According to Dick Worick, President of The MSR Group, the newest version includes several enhancements, many developed in conjunction with the company’s large retail banking clients.

Features debuting in the 2009 edition are:

• Best Practice Forum:  Sharing of best practices is an excellent way for an organization to maintain consistency in service and increase customer satisfaction and advocacy scores.  The APECS® Performance Monitor now provides an opportunity for Best Practice sharing through its Forum discussion board.
• Audio Action Alerts and Magic Moments:  APECS® offers true “voice of the customer” by incorporating the actual audio from customer interviews.  Clients have access to both customer concerns and kudos.

The enhancements further establish APECS® as unique in the field of customer experience monitoring.  Prior to the 2009 additions, APECS® offered the following distinctive features:

• Real-time Service Performance Evaluations: Within 24 to 48 hours of an experience, customers are interviewed and 24 hours later the information is analyzed and waiting on clients’ Performance Monitor website.
• Advocacy Charting: Scores are calculated and converted to a pie chart showing the percent of a client’s customer base who are “Advocates,” “Loyal,” “At Risk,” and “Critical.”
• Net Advocacy Rating: The above information is summed up in a Net Advocacy Rating (NAR) calculated as the percent of “Advocates” minus percent of “At Risk” and “Critical.”
• Dashboard: An instant view of overall Net Advocacy Rating and quarterly positive or negative trending.
• Problem Resolution Tracking and Audit System: A central repository for customer concerns/complaints using easy-to-understand symbols to show problem status along with a follow-up mechanism to provide a running data trail.
• Key Driver Analysis: Data is analyzed and those criteria most critical to increasing advocacy scores among customers are highlighted.
• APECS® National Banking Norms: Statistically reliable norms by conducting the APECS® survey with a random sample of banking customers across the United States.

To learn more about this proven method of increasing customer loyalty, please contact us today at 800-737-0755 or view the demo at www.themsrgroup.com.

 

About the survey: The MSR Group’s National Banking Study uses a random sample of banking customers who have had a recent branch, call center, ATM or online banking experience. The study is conducted by telephone each quarter with an annual sample size of 2400. Results are based on the most recent 4 quarters.  Index scores referred to in this article are based on values assigned to response categories as follows: Excellent 100; Good 65; Just okay 25; Fair 0; and Poor 0. The MSR Group uses the American Bankers Association criteria to classify banks into categories based on assets.