• by Karlene Lukovitz  @KLmarketdaily, June 7, 2007

Consumer satisfaction with their banking experiences and commitment to their primary banking institutions increased appreciably during the past year, according to the newly released J.D. Power and Associates 2007 Retail Banking Study, which is based on responses from nearly 21,000 households.

Overall satisfaction rose by 22 index points to 763 on a 1,000-point scale--and this was reflected by an associated rise in those highly committed to their banks, from 28% in 2006 to 31% in 2007. J.D. Power estimates that for every 1 million customers a bank has, a five percentage-point increase in the number of customers shifting from moderately to highly committed can lead to an additional $1 billion in deposits.

The study analyzes customer satisfaction with the retail banking experience based on six factors: transactions (in-person, ATM, online, automated and live phone), account initiation/product offerings, account statements, convenience (hours of operation and branch locations), fees, and problem resolution.

Here are the top five banks within regions:

* Mid-Atlantic region (Delaware, Maryland, New Jersey, New York and Pennsylvania): Commerce Bancorp (828 points), Community Bank (808), Washington Mutual (786), Citizens Bank (757) and Wachovia (754).

* Midwest (Illinois, Indiana, Michigan, Minnesota, Montana, Ohio and Wisconsin): Washington Mutual (802), Marshall & Ilsley Bank (762), Comerica Bank (760), LaSalle Bank (755) and Citibank (754).

* Southeast (Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee and Virginia): Bank of America (784), Wachovia (780), First Tennessee Bank (773), Washington Mutual (764) and Citibank (763).

* Southwest (Arizona, New Mexico, Nevada, Oklahoma, Texas and Utah): Woodforest National Bank (790), Wachovia (774), Washington Mutual (762), Bank of America (759) and Capital One (753).

* West/Pacific (California, Oregon and Washington): Washington Mutual (774), Bank of the West (763), Citibank (750), Bank of America (743) and US Bank (743).

Northeastern banks were included in the survey but not ranked, due to insufficient sample size.

J.D. Power points out that nearly 85% of customers do some of their banking at a branch, and that leaders within the regions share strength in terms of offering branch locations, as well as more convenient operation hours.

Community banks and credit unions tend to shine at providing shorter in-person transaction times, fewer out-of-service ATMs, and shorter wait and transaction times on telephone calls handled by live operators. And as J.D. Power Senior Director of Banking Practice Jeff Taylor points out, banks that provide an outstanding customer experience, as opposed to primarily stressing price and convenience, "can enhance their business at a lower cost and will likely achieve long-term sustainable advantages over the competition."

However, larger banks are also making strides in enhancing the banking experience, and because smaller banks/credit unions tend to "struggle" on the hours/locations factors, stressing convenience is an important competitive opportunity for the larger institutions, Taylor says.

Banks doing a particularly good job of marketing multiple products to consumers were Citibank, with 4.5 products per customer, on average, and Bank of America, with 3.8.

As for selecting a bank in the first place, good reputation, as supported by recommendations and word of mouth, is the primary reason cited by consumers, followed by free services and convenient locations. On the overall brand image/reputation front, the leaders were Commerce, Old National, First Merit, Washington Mutual and Marshall & Ilsley.

Among the nation's largest banks, Bank of America and Wachovia not only garnered high satisfaction rankings in this study, but were among the five that exceeded the banking industry's average performance on brand equity as a contributor to market capitalization, as ranked in an unrelated annual study by the brand strategy firm CoreBrand.