Under The Microscope
Poll Finds Member Satisfaction Takes A Dip
ANN ARBOR, Mich.-Member satisfaction with their credit unions has taken a slight dip in a new poll. According to a study conducted by the American Customer Satisfaction Index (ACSI), "credit unions are now beginning to feel pressure to increase performance." ACSI noted that historically CUs have had significantly higher consumer satisfaction with checking, savings and personal loans than the big banks, but for the first time since 2008, satisfaction declined 5% to an index score of 80. Banks received a rating of 76.
"The main reason for the sudden drop in customer satisfaction among credit unions is partly due to the expansion of new offerings, including mortgage and investment banking," ASCI said in its analysis. "This jump into new markets has hurt a number of credit unions, which were forced to cut costs to recover losses."
Among the other findings:
* When those who are unhappy with the big banks leave, overall customer satisfaction improves. Even as the big banks introduce new bank fees, the study found customers are finding ways to avoid them.
* Among the big banks, Wells Fargo held strong, keeping their number one spot with an index of 73. Citigroup, which increased by 2% to 69, came in second, followed by Bank of America, which also saw an increase of 2% to 68. Chase came in last among the big banks with an index of 67, down 2% - the forth-consecutive decrease.
The study was based on 100,000 telephone interviews.
CUs Having Success With Debt Protection
WASHINGTON-NAFCU Services Corp. and its preferred partner, Securian Financial Group, conducted a survey of NAFCU members on debt protection.
Of those NAFCU members offering debt protection that participated in the survey, 91% of credit union executives who responded described their programs as "successful." Sixty-four percent of those executives said their protected loan volume increased when they implemented debt protection, and 55% indicated an increase in fee income.
Debt protection is a lending product that protects the member's ability to make loan payments. Survey responses indicated that the most commonly covered loans are consumer loans, home equity loans and credit cards. The most commonly protected events include death, disability and involuntary unemployment.
Of the 80% of credit unions that do not have a debt protection program, 83% indicated they would consider offering it in the future.
Eighty-one percent of credit unions with a debt protection program said they are satisfied with the program, compared to only 45% of credit unions that are satisfied with their credit insurance program. "We are definitely seeing movement from credit insurance to debt protection," said Gibbons.
For info: www.nafcu.org or www.securian.com
Gap Persists Between Consumers, Banks
CHICAGO-There has been a "leveling off" of consumers' attitudes about banks' reputation and trustworthiness, according to the latest installment of the biannual BAI & Finacle Index of Bank Sentiment.
The consumer sentiment portion of the latest Index, which reports on U.S. bank executives' and consumers' views of the banking industry, tallied 77 points, just four points lower than the February 2010 mark, and 23 points below the baseline of 100 established by BAI and Finacle in August 2009.
The bankers' portion of the latest index, which reflects how industry executives believe consumers feel about banks, equaled 121, still significantly higher than the consumer view of 77, but a 16-point drop and more aligned view from where bankers scored consumer sentiment towards the industry in February 2010.
The biannual research, "Consumer Confidence and the Innovation Imperative in Retail Banking," creates the index based on responses to surveys from bankers and a representative sample of 2,500 U.S. bank customers about innovation, the economy, bank fees, managing finances and trust in financial institutions.
"We believe that the gap in sentiment persists because bankers place more emphasis than consumers on how much progress the industry has made in the past year. What we also see in the research findings is that the confidence consumers have in their primary financial institution continues to fare much better than the aggregated consumer view of the U.S. economy and the banking industry as a whole," said Debbie Bianucci, president and CEO of BAI.
For info: www.bai.org
IT Spending In Banking Projected To Grow 4%
BOSTON-North American IT spending is on the uptick and is expected to grow by 4%, to $53.4 billion in 2011 from $51.4 billion in 2010.
According to a new study by Celent, a financial research and consulting firm, spending will continue to rise in 2012, reaching $55.9 billion, an increase of 4.6%, and will grow further in 2013, reaching $58.3 billion.
"We are not completely out of the woods, but the good news is that the turnaround has begun," the consultancy said in its new report, "IT Spending in Banking: A North American Perspective."
Key findings of the report include:
* Retail banking IT spending is expected to grow by 3.2% in 2011 after a flat year in 2010. There will be a large emphasis on front-end offerings that are in need of refreshing, including consumer online banking, PFM, and mobile banking.
* Wholesale banking spending will grow by a solid 6.1%, the second straight year of strong growth in this space. Much of the emphasis is on corporate cash management as banks look to upgrade their aging platforms to woo business.
* Spending on external software by North American banks will rise by 7.5% to $9.9 billion in 2011. This figure will continue to grow, rising to $11.4 billion in 2013, the company projects.
* New Investment spending is skyrocketing. Banks across North America are increasingly emphasizing innovation and new product development. Spending on new investments will grow by 12.9% in 2011 to $12.8 billion.
* About three-quarters of the IT budget is dedicated to maintenance. In 2011, North American banks will spend $40.7 billion on maintaining systems and operations.
* Increased project scrutiny, short ROI required.