Banking --Customer Royalty==Brand Royalty

Customer loyalty and brand image decline among retail banking customers for fourth consecutive year



Loyalty to banks wanes, particularly among customers of larger institutions. Study finds that customers may be highly satisfied even when they are charged bank fees, provided that they perceive they are receiving sufficient value in exchange.


-->Poor customer service-the most common reason given for switching banks-is cited by 37 % of customers who changed their primary bank in 2010.    

For a fourth consecutive year, customer loyalty and perceptions of brand image among retail banking customers continue to decline, while satisfaction has leveled off, according to the  U.S. Retail Banking Satisfaction Study.

In addition, the percentage of customers who say they "definitely will not" switch banks during the next twelvemonths has decreased significantly during the past three years to 34 per cent in 2010 .

The gap in loyalty intent between customers of larger and smaller banks is considerable, with 41 per cent of customers at smaller banks who say they "definitely will not" switch, compared with 32 per cent at larger banks.

Higher customer satisfaction with in-person service and attention is an important contributor to increased loyalty at smaller banks. Acquisition rates are also improving at smaller banks, with new customers accounting for eight per cent of the customer base, compared with an industry average of six per cent.


"As retail banking customers become considerably less loyal, banks need to focus on getting the fundamentals right," . "Banks that get back to the basics-such as maintaining a clean branch and greeting customers upon entering-may help to alleviate some of the distress customers are experiencing and increase their overall satisfaction."


"While fees have a significant impact on customer satisfaction, banks may mitigate this effect by giving customers choices," said Beird. "Customers tend to be considerably less dissatisfied when they have different overdraft options, such as the ability to transfer funds from a savings account or receive a balance alert. Proactive communication may also help to lessen the negative impact of fees, as satisfaction is more than 100 points higher among customers who are aware of changes in fees ahead of time, compared with customers who are taken by surprise."

The study also finds that customers may be highly satisfied even when they are charged bank fees, provided that they perceive they are receiving sufficient value in exchange. When satisfaction with fees is above average, customer's ratings for branch access and appearance, promptness of being served, and the bank's website navigation and range of services are also higher than average.



The study analyses customer satisfaction with the retail banking experience based on six factors: account activities; account information; facility; fees; problem resolution; and product offerings.