Money can’t be everything. Can it?
Despite the fact that retail banks in Canada have achieved record profits, they might be losing touch with some of their customers. Customer engagement has become a key priority for Canadian retail banks because consumer satisfaction scores have declined due to high fees and an actual or perceived reduction in the number of services, according to the J.D. Power 2015 Canadian Retail Banking Satisfaction Study.
The study, now in its 10th year, measures customer satisfaction with retail banks in two segments: Big 5 Banks and Midsize Banks. In both segments, customer satisfaction is measured in seven factors: (listed in order of importance): Product; self-service; personal service; facilities; communication; financial advisor; and problem resolution. Satisfaction is calculated on a 1,000-point scale.
Record profits for retail banks in Canada are being achieved at the expense of customer satisfaction as customers report increased fees and reduced levels of service in the branch and on the phone. As a result, overall satisfaction in the Big 5 Banks segment averages 737, down 12 points from 2014, while satisfaction in the Midsize Banks segment is 759, down 7 points.
“When a retail bank increases fees and trims back on its core services to customers for the sake of increasing profits, they may be losing touch with one of the most important aspects of their business survival—the customer,” said Jim Miller, senior director of the banking practice at J.D. Power. “Retail banks that make their short-term earnings at the expense of their customers are trading long-term customer loyalty for short-term profits. Customers will wait only so long in line at a branch or on the phone to handle a transaction or resolve a problem, especially when they are already unhappy with high fees. Banks that don’t provide enough value for what their customers are paying are likely to find their customers switching to low-cost competitors, some of which provide great customer service.”
In the Big 5 Banks segment, the study shows that 46% of customers indicate paying a monthly maintenance fee for their checking account, compared with 40% in 2014, with the average fee increasing year over year to $13.15 from $12.18. Among Midsize Banks, 25% of customers pay a monthly maintenance fee in 2015, compared with 27% in 2014, with the average fee increasing to $10.21 from $9.70.
Here are some key takeaways from the study:
Customer satisfaction has an impact on their loyalty. Among Big 5 Bank customers who are dissatisfied, 9% say they “definitely will or probably will” switch banks in the next 12 months, compared with 7% in 2014. Midsize 
Banks have had a smaller increase, to 10% from 9% in 2014.
Problem incidence has declined slightly year over year at Big 5 Banks (13% vs. 14%, respectively) and Midsize Banks (10% vs. 11%). Satisfaction with problem resolution at Big 5 Banks declined by 33 points to 633 in 2015, and declined by 62 points to 586 at Midsize Banks.
While Midsize Bank customers experience fewer problems, they are less satisfied with problem resolution than Big 5 Bank customers. The decline in problem resolution satisfaction is due to fewer problems being resolved, and among the issues that are resolved, fewer are taken care of in one contact and in one day compared to 2014.
TD Canada Trust ranks highest in overall customer satisfaction among Big 5 Banks for a 10th consecutive year, achieving a score of 746. TD Canada Trust performs well in all seven factors, particularly in facilities.
Among Midsize Banks, Tangerine, formerly known as ING Direct Canada, ranks highest in overall customer satisfaction with a score of 811 for a fourth consecutive year. Tangerine performs particularly well in product, personal service, self-service and communication.
The 2015 Canadian Retail Banking Customer Satisfaction Study is based on responses from more than 14,000 customers who use a primary financial institution for personal banking. The study includes the largest financial institutions in Canada and was fielded from April 2015 through May 2015.