If you've ever pounded your head into a wall (figuratively, I hope), wondering what your bank is thinking and wishing it understood your unhappiness with them, don't worry: They hear you. For the fifth year in a row, J.D. Powers and Associates has released its 2010 U.S. Retail Banking Satisfaction Survey, which took stock of the opinions of 48,000 Americans regarding their banks.
And for the fourth year in a row, overall satisfaction from retail banking customers has decreased.
The drop is mostly due to a decrease in satisfaction with the banks' customer service. Of the respondents who switched banks this year, 37% of those customers left because of poor customer service.
And, yes, high fees are another reason customers have left their banks. Twenty-nine percent of customers who switched banks in 2010 gave "high fees" as their primary reason for heading to the exits. Conversely, the study also concluded that some customers are okay with fees -- as long as they feel they're getting something of value for those fees.
Jack Vonder Heide, president of Technology Briefing Centers Inc., a research and education consultancy that serves banks, told WalletPop that the survey shows that the smaller the bank, the better the customer feels about it. Forty-one percent of small bank customers said they would definitely not switch banks any time soon; only 32% of large bank customers said the same.
"Small banks have a rich history in the community," observes Vonder Heide, in explaining why smaller banks have more customer loyalty. "Many have been in the same location for over 100 years. Large banks gobble each other up and may be here today and gone tomorrow."
And, he adds, "Larger banks are perceived as shaky institutions that engage in high-risk behavior requiring taxpayer bailouts. Small banks are perceived as customer- and community-focused organizations that employ great people, make sensible loans and engage in sound business practices."
Of course, one reason that smaller banks are perceived that way is because for the most part, it's true. I spent some time on the phone with Matt Wallaert, a behavioral psychologist, and Avi Karnani, co-founder of the personal finance site Thrive. They're both now the founders of Churnless, a new (so new, in fact, that they only have a Linked In page and not a website) consulting firm aimed at any business that prefers not to churn through customers but, instead, keep them for a lifetime.
The problem, as Wallaert and Karnani see it, is that the bigger banks are spending too much money on marketing and not enough on their core business, like trying to help their customers manage their money.
"Words are convincing, but actions are always better," says Wallaert. "Unfortunately, with the biggest banks, a lot of the money that gets spent is on marketing -- words, not actions. I think banks have crossed the threshold where they're not even providing quality products any more. There's a psychology of needs -- where you need to have this, you want to have this, and it would be nice to have. Well, I think banks have fallen below the level of providing the basic services. We're not even getting the 'needs to have' met any more."
Karnani also has some advice for the banking industry. "One of the benefits of a bank is its long-lasting reputation," says Karnani, who points out that if a bank is good to us, we may stick with them the rest of our lives. After all, who really wants to go to the hassle of changing a bank once you have all those automatic withdrawals set up and you've figured out the quirks and eccentricities of your financial institution?
If we stay with a bank indefinitely, Karnani says, "The primary beneficiary is the bank itself. You might have a checking account, a savings account, a credit card, maybe a 401(k) or another investment, a mortgage. If a bank takes a steward position, the bank benefits by having your business over the course of your life. But when banks only focus on short-term gains, like sticking you with fees, it ultimately doesn't help you become a better customer for the banks."
Karnani adds that if a bank helped its customers avoid fees or a credit card with a punitive interest rate, that same customer would likely put any extra money they saved into a savings account, which, of course, would help the bank in the long run. But the long run isn't where the banks seem to be looking these days.
"We're in a very combative sort of relationship with our banks," Wallaert says. "I think when people go to a new bank these days, they expect to leave within 12 to 24 months because they expect to have problems." With financial institutions in general, he adds, there's little feeling among consumers that there's any mutual respect going on, which leads to people doing things like leaving a bank high and dry with an unpaid mortgage.
"There's a lot of this 'I'm going to screw them first' mentality. And that," concludes Wallaert, " is a bad place for the whole country to be."
Geoff Williams is a frequent contributor to WalletPop. He is also the co-author of the book Living Well with Bad Credit.
Banking customers still unhappy, survey shows