Consumer Satisfaction Rebounds for Big, Midsize Banks

Overall banking satisfaction among small businesses bounced back in the last year, with large and midsize banks showing the strongest improvements, according to the J.D. Power 2014 U.S. Small Business Banking Satisfaction Study.  

Now in its ninth year, the study measures small business customer satisfaction with the overall banking experience by examining eight factors such as product offerings, account manager, facility, account information, problem resolution, credit services, fees and channel activities.

From July 2014 through September 2014, J.D. Power polled nearly 9,000 small business owners or financial decision-makers who use business banking services.

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Satisfaction among small business banking customers overall is 766 on J.D. Power’s 1,000-point scale, up 14 points from 2013. Of those customers who are highly satisfied—reporting scores of 800 and above—nearly 60% say they “definitely will” recommend their bank, compared to just 11% of those with medium satisfaction (500 to 799) and only 2% with low satisfaction (sub-500).

J.D. Power ranked banks based on total deposits as reported by the Federal Deposit Insurance Corporation (FDIC), with big banks defined as the six largest financial institutions averaging $180 billion and above, and midsize banks being those with $2 billion to $33 billion in deposits.

While satisfaction improved for big and midsize banks, it remained flat for regional institutions, institutions J.D. Power defined as having between $33 billion and $180 billion in deposits. 

In 2014, regional banks are losing their ground as big banks continue to lead in offering large networks of branches and ATMs while increasing their focus in providing personal service, while midsize banks continue to excel in offering low fees and have become more competitive in the technology they offer to customers, J.D. Power noted. 

Until recently, many regional banks have positioned themselves as having the best of all worlds, with the products, convenience and technology of the big banks and the personalized services of smaller banks, said Jim Miller, director of banking services at J.D. Power.

“While some regional banks remain successful at this, overall the regional banks have lost their lead over big banks in personal service while smaller competitors have passed regional banks in convenience and satisfaction with product offerings,” Miller said in a written statement.

Additionally, problem incidence was highest at regional banks at 24%, compared with 23% at big banks and 21% at midsize banks, according to the study.

“To remain competitive, regional banks will have to develop value propositions that differentiate themselves from their larger and smaller competitors and then flawlessly execute their plans,” said Miller.

In terms of rankings, JPMorgan Chase (NYSE: JPM) ranked highest in small business banking satisfaction in the West region (789) for a second consecutive year and in the Northeast region (786). The bank performed particularly well in product offerings, facility, account information, credit services, account manager and channel activities.

Following Chase, other notable rankings in the West included CitiBank  (NYSE: C) at 770; Union Bank (NASDAQ: UNB) at 762; and Wells Fargo (NYSE: WFC) at 757.

In the Northeast, M&T Bank (NYSE: MTB) followed Chase with a rating of 779. PNC Bank (NYSE: PNC) came next with a a 778 rating. 

For the Midwest, Chase (791) took a backseat to Huntington National Bank (NASDAQ: HBAN), which posted a customer satisfaction rating of 813. CitiBank rounded out the third spot in the region with a rating of 785.

Regions Bank (NYSE: RF) led the charge down South, with a rating of 803, while Chase (799) and Wells Fargo (780) followed suit. 

Written by Jason Oliva

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