The banking industry's reputation took a major hit in the wake of the financial crisis. Now consumers are seeing banks in a better light, according to a new survey from the American Customer Satisfaction Index.

Customer satisfaction with retail banks climbed to 78 on a 100-point scale this year, up 1.3% from last year. The last time the banking industry posted a score that high was in 2007. The report is based on interviews with 5,296 randomly selected customers conducted between July and September.

The increasing popularity of online banking has helped restore the industry's appeal, according to ACSI managing director David VanAmburg. Customers gave bank websites a rating of 85 "for their ability to provide satisfying experiences for those of us who like to do our banking online to manage accounts, pay bills, and check balances," VanAmburg says.

Online banking has also had a less obvious effect on customer satisfaction, according to VanAmburg. "It's relieved some of the pressure on branches … which has contributed to a perception on the part of customers who do visit branches that they're getting better customer service," he says. "Customers say they're getting transactions done more efficiently and speedily, rather than waiting in line like they did 15 or 20 years ago." Customers gave the courtesy and helpfulness of branch employees a score of 91 and ranked the speed of in-store transactions at 88.

While customer satisfaction improved across the banking industry, regional and community banks made the biggest gains. Smaller banks — defined here as all banks except for the four largest — received a score of 83, a 5% increase from 2012. Free checking accounts, fewer fees and the "personal touch" of customer service all gave smaller banks an edge over the biggest companies, according to VanAmburg.

Smaller banks offer "the sense that they know you and they care about you," VanAmburg says. "That's more difficult for large banks to achieve."

The nation's four biggest banks also made strides in customer satisfaction, climbing 4% to a score of 73. JPMorgan Chase (JPM) emerged at the top of the pack with a rating of 76, up 3% from a year ago. The company's growing number of branches has improved its reputation for convenience, VanAmburg says.

"As much as we like online banking, we also like the convenience of having ATMs scattered throughout our locales and having branches readily available," VanAmburg says. "Chase is very attuned to that."

Citigroup (NYSE: C) scored second in customer satisfaction, climbing 6% to 74. Wells Fargo's (WFC) score ticked up 1% to 72.

Bank of America (BAC) slid into last place for the third consecutive year at 69, despite gaining 5% from its score in 2012. The company is the only one of the four biggest banks that has yet to return to a pre-recession score.

"The key issue for Bank of America … is that when they fell in the wake of the mortgage crisis and the financial crisis, they fell a bit farther than everyone else," VanAmburg says. The company's reputation suffered from its acquisitions of Countrywide Financial and Merrill Lynch, according to VanAmburg. More recently, he notes, Bank of America has been prominently featured in news stories about bank fees.

Credit unions surpassed banks both large and small in customer satisfaction. Customers gave credit unions a score of 85 — up 3.7% from the previous year. Credit union membership has surged in recent years as customers seek out free checking accounts and lower interest rates on loans, according to the report.

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