18 October 2006

In-Person Contact Drives Bank Customer Satisfaction

The Toronto Star, Tara Perkins, 18 October 2006

Even though the majority of Canadian banking transactions are executed outside of a bank, it's the "in person branch experiences" that are most important in determining how customers view financial institutions, a J.D. Power and Associates study suggests.

The study found that, on average, 13 per cent of transactions take place within the bank and nearly one-third of customers do all of their banking outside of the bricks-and-mortar facility.

But, while online banking is convenient, "an excellent online offering cannot replace a positive branch experience," said Charles Schade, senior director of research at J.D. Power and Associates, which released its first Canadian retail banking customer satisfaction study yesterday.

Branch experiences "come out as the most important within overall satisfaction," Schade said in an interview. "Things like whether the teller was courteous, whether they were consistent with their service, whether they appreciated your business; their knowledge.

"It's really touchy-feely stuff that's hugely important to customers when they're going into the branch," he said.

While convenience has become a requirement, banks risk becoming distanced from their customers and losing out on the opportunities that face-to-face contact provides, including the chance to impress customers and show appreciation for their business, the study said.

Among Canada's big five banks, TD Canada Trust took top marks in customer satisfaction.

"I think they're deemed to be pretty innovative in terms of their on-the-street presence," Schade said, citing TD's extended operating hours.

Tim Hockey, co-chair of TD Canada Trust, said: "Our strategy is clearly to be the leader in customer service, and we've put a lot of energy behind that.

"There have been lots of announcements recently by the banks about getting back into opening branches," he said, adding "we've actually been doing this for quite some time."

Last year, TD opened 21 branches, equal to the total branches opened by all of the other big five banks combined, Hockey said.

"In 2006, we'll open 30. In fact, we opened nine yesterday and we're opening seven next Monday," he said.

Hockey said that the flourishing of Internet banking does not diminish the role of the branches.

"What we've found ... is that when we've developed new channels, customers didn't decrease the number of transactions they did in previous channels like branches, they've just added more," he said.

"Our branches are busier than they've ever been."
Investment Executive, 17 October 2006

Although online banking is by far the most widely used and preferred method among Canadians to complete banking transactions, in-person branch experiences are more critical in terms of forming lasting impressions of their financial institution, according to new report from J.D. Power and Associates.

The study examines customer satisfaction with the overall banking experience, including customer service, product offerings, fees, statements and banking channel details. Results show that transactional experiences drive satisfaction with retail banking, accounting for nearly 50% of overall satisfaction.

The study finds that 77% of Canadians use online banking capabilities. For nearly one-half of retail banking customers, this service is considered “extremely important” and is the preferred banking channel for 60% of Canadians. On average, banking customers visit their bank’s Web site 14 times per month to complete routine banking transactions, such as viewing account statements and balances.

“Online banking is convenient, but an excellent online offering cannot replace a positive in-branch experience,” said Charles Schade, senior director of research at J.D. Power and Associates, in a news release. “Customers continue to rely on face-to-face contact to build a trusting relationship. That personal interaction cannot be duplicated online or anywhere else but at the bank branch.”

Based on responses from 12,053 Canadian retail banking and credit union customers, the study includes all the largest financial institutions in Canada. Across the industry, overall banking satisfaction is determined based on six factors. They are (in order of importance): transaction methods; account set-up and product offerings; facility; account statements; fees; and problem resolution.

Among the Big 5 Canadian banks, TD Canada Trust ranks highest in overall customer satisfaction. TD Canada Trust has industry-leading scores among the Big 5 banks in Canada for most transactional touch points, as well as broader drivers of customer satisfaction such as facility and account statements. TD Canada Trust is followed in the rankings by Scotiabank and RBC Royal Bank, respectively.

The study also finds that, on average, 13% of transactions take place within the bank. When customers visit their bank branch, a positive experience is driven by personal attention from the teller, efficient service and access to the senior-level staff. In general, credit unions give their customers more care and attention than banks, establishing business procedures that ensure their customers are not waiting in line for more than five minutes, and that transactions are completed with efficiency.

“In this era of convenience-oriented services, the appeal of extended operating hours cannot be underestimated,” said Schade. “Although it’s difficult for large institutions to compete with smaller institutions and credit unions - which often have more flexibility to respond to customer needs - banks have the ability to capitalize on their overwhelming presence in the marketplace by providing a welcoming environment and extended hours of service, focusing on providing the type of service that customers are unable to receive online.”

Convenience channels are diminishing the need to visit branches to conduct routine banking transactions. In fact, nearly one-third of customers do all of their banking outside of the brick-and-mortar facility. While convenience has become a requirement among retail banking customers, financial institutions run the risk of becoming distanced from their customers and, more importantly, losing out on the opportunities that face-to-face contact provides - the chance to impress customers and show appreciation for their business.