J.D. Power survey finds more consumers are willing to switch banks
Like them or not, banks can be hard to leave. Who wants to transfer accounts, get used to new branch locations or master a different online banking system?
But consumers increasingly are willing to unglue themselves from what bankers call “sticky” relationships, according to a retail bank survey released by J.D. Power and Associates Inc. last week. It found a growing belief that banks are driven only by short-term profit goals, and that they often overlook basic services such as keeping branches clean and explaining fees to customers.
In the survey of 48,000 Americans this year, 34% said that they would “definitely” not switch banks during the next 12 months. Back in 2007, as the financial system started to hit the skids, 46% of those surveyed by the Westlake Village market research firm said they would not be switching.
For the first time in the bank survey’s five-year history, J.D. Power broke out results in California. A perfect bank would get a 1,000 rating, although there is clearly no such thing in the eyes of consumers, who gave even favorite banks the equivalent of Cs.
Bank of the West and Union Bank — both based in the San Francisco area — had the highest ratings in California: 782 and 771, respectively.
They edged out Wells Fargo Bank (761) and Wachovia Bank (753), which consistently have done well in customer surveys. Wells Fargo and Wachovia completed their merger in California last weekend .
Trailing were Citibank (728), U.S. Bank (728), Bank of America (717) and Chase Bank (701), which took over branches of failed Washington Mutual.
The ratings did not include results for smaller banks known for customer service, such as City National Bank in Los Angeles and San Francisco’s First Republic Bank.
The survey comes on the heels of the much-maligned government bailout of the industry and reputation-damaging headlines about mortgage losses and foreclosures at big national banks. Lenders also have been hammered by complaints about high fees, reductions of available credit and higher interest rates on charge cards and home-equity lines of credit.
The backlash includes a proposal before the Los Angeles City Council to fine banks that don’t maintain foreclosed properties and Huffington Post website founder Arianna Huffington’s crusade to incite consumers to yank deposits from Bank of America, Wells Fargo, Chase and Citibank to move them to community banks.
The community bank model — better service, higher cost — is appealing to many consumers, said Michael Beird, director of the survey. J.D. Power said 41% of smaller bank customers were highly loyal, compared with just 32% at the big banks.
Poor service, the most common reason for switching banks, was cited by 37% of customers who changed their primary bank this year, with 29% of switchers complaining of high fees. J.D. Power said the fees themselves were not necessarily a problem if the customers believed that they were getting something of value in return.
Citibank called the results “disappointing and simply not good enough,” saying in a statement that it would increasingly measure its performance based on customers’ willingness to recommend the bank to others.
Chase, which said Wednesday that it planned to open 90 new California branches this year, declined to comment on the survey.
U.S. Bank, which also is expanding in the state through acquisitions and new branches, said the survey was “a good benchmark as we work to deliver an excellent customer service experience.”
Bank of America declined to comment on the survey, but said in a statement that it was giving less weight to product sales numbers these days in evaluating employees and instead shifting to “a customer relationship-centric approach where we will grow the business by meeting customer needs.”
