A steady rise in deposit rates throughout last year appears to have consumers feeling better about their banks, as evidenced by the sector's first gains in a key customer satisfaction survey in three years.
Banking executives also say efforts to improve service are helping them compete better with other industries in the quest for a more satisfied customer. Related Link
Customer satisfaction scores going back to 1994
Wells Fargo & Co. has lagged competitors in the index in recent years, but its score jumped 7.5%, the biggest leap in the banking sector, to 72, the company's highest score ever in the 12-year-old index.
Jay Freeman, Wells' head of sales and customer development, said customer satisfaction at the $482 billion-asset San Francisco company benefited from improved service, not pecuniary factors.
A critical factor in customer satisfaction and loyalty is "how we welcome them and the degree to which we impose a wait time on them," he said in an interview last week.
JPMorgan Chase & Co.'s score rose 2.9%, to 72, following four years at 70. Scott Powell, the chief executive officer of consumer banking at the $1.3 trillion-asset New York company, said rates did play at least some role in the improvement.
"Whether it's a rate on a CD or a savings account, the rate is certainly higher, and I'm sure that does contribute" to customer satisfaction, Mr. Powell said in an interview Friday. However, he also said that adding staff, branches, and automatic teller machines helped the score.
Claes Fornell, a professor of business at the University of Michigan and the creator of the index, said that bank customers, like those at retail stores, were just as likely to be motivated by price.
"All these [banking] companies are helped by the markets and what happens with interest rates," he said. "Customers are getting more in their various accounts. There is no doubt we can see in our data that plays a role" in rising scores in the banking industry.
The index measures customer expectations, perceived quality, and perceived value of companies in various industries to derive a satisfaction score on a 100-point scale.
Bankers say that they pay attention to how other industries perform, and that retailers draw special scrutiny, for the attention they pay to creating a positive shopping experience as well as for the interest many of them have expressed in extending their customer relationships to include financial services.
In a finding that somewhat echoed the banking scores, the retail industry's fourth-quarter improvement appeared to reflect customers' being more satisfied with prices, Prof. Fornell said.
While the average for the entire retail sector improved, no department store improved its individual score. Kohl's Corp. of Menomonee Falls, Wis., remained the highest scoring department store, at 80. Wal-Mart Stores Inc., which is based in Bentonville, Ark., scored 72, unchanged from a year earlier.
Best Buy Co. Inc. of Minneapolis had the biggest improvement among all retailers. Its score rose 7%, to 76.
Wachovia Corp., which has had the highest rating among banking companies in each of the last six years, increased its score 1.3%, to 80. The $707 billion-asset Charlotte company said it is modeling its service on higher-end retailers.
Gwynne Whitley, the director of corporate customer service excellence at Wachovia, said she is striving for consistency in branch experience demonstrated by retailers, such as Nordstrom Inc. of Seattle.
"If you go to a Nordstroms in Charlotte, N.C., or you go to a Nordstroms in Washington, D.C., they have the piano player located virtually in the same spot," Ms. Whitley said in an interview last week. "That clearly is a very strong learning area for us about how do we become very consistent in the experience we are creating."
Mr. Freeman said Wells is benefiting from things such as increased branch staffing, faster responses from call centers, and - in a move taken straight from Wal-Mart - welcoming customers when they walk into branches. San Francisco branches have "welcome zones," and Texas branches came up with a "two-step rule" to greet customers before they take more than two steps in a branch, he said.
One of the highest increases for any company in the index came at Charles Schwab Corp., whose score rose 8.1%, to 80. The San Francisco company said it too has benefited from simplified pricing and improvements in its call centers.
"We know that the simpler that we can make our pricing - the more transparent, the easier it is for clients to understand - it has a big impact," Walter Bettinger, the president of Schwab Investor Services, said at an investor presentation Dec. 4. Average wait times for customers calling Schwab went from a minute and 15 seconds in the third quarter of 2005 to 15 seconds in the third quarter of last year, the company said.
The fourth-quarter index included Citigroup Inc. for the first time; its score was 72. A spokesman for the $1.9 trillion-asset New York company said in an e-mail Friday that it is committed to customer service and recently installed kiosks in its branches to gather customer feedback to improve service.
Bank of America Corp. scored 72 for the third consecutive year. A spokeswoman said Friday in an e-mail that the $1.5 trillion-asset Charlotte company "continues to be committed to delivering a quality experience for our customers." She cited B of A's free online trading and a mobile banking initiative as indications of its commitment to customer satisfaction.
