• by Aaron Baar , August 25, 2008

After spending significant resources building and renovating their retail operations to look at feel more like stores, banks still have work to do when it comes to the customer experience, according to new research from J.D. Power and Associates.

In its inaugural Retail Banking Mystery Shopping Study, the Westlake Village, Calif., company found that some of the basics when it comes to customer service - such as smiling or shaking hands with new customers and cleanliness - were lacking.

"There's been this trend of banks saying they want to offer a better retail environment. We wanted to see how they were doing with it," Rockwell Clancy, executive director of financial services at J.D. Power tells Marketing Daily. "There's a lot of room for improvement."

According to the study, which is based on responses from 475 mystery shoppers at banks in the Mid-Atlantic and Southeast regions of the U.S., half of the new account customer service representatives did not smile when greeting a prospective customer and one-third did not shake hands. In addition, 14% of the shoppers felt the new-account representative did not give them their full attention as customers.

"Overlooking these simple gestures conveys a lack of respect for the customer or disinterest in their business, and can destroy the foundation of a relationship before it's even started," Clancy says. "Where is the retail in retail banking?"

The study also found that new-account representatives only ask an average of five questions when it comes to assessing customer needs, when perhaps more is needed. As a result, 20% of new-account representatives offered only one option for a new customer, while 16% failed to provide recommendations, Clancy says. Twenty-one percent of the new-account representatives failed to ask shoppers if they wanted to open an account on their visit.

When it comes to providing a customer-friendly place, the retail banks aren't doing much better. Only half of the shoppers said they were greeted upon entering a branch, and only 42% included amenities such as refreshments, televisions, children's play areas and computer access. Nearly a quarter of the shoppers had a problem with the ATMs, including lack of supplies, trash or garbage in the area, or the ATM not working.

"To get people to walk in the door is brutal in this [banking] environment. How much are banks leaving on the table due to missing the basics?" Clancy says. "For [the customer] opening an account is not a trivial task. The ability to turn it into a great experience can make the difference."

Not everything was negative, however. Two-thirds of the mystery shoppers said parking at branches was "extremely easy," and consumers overall are satisfied with teller service once they become customers. "There is opportunity here," Clancy says. "Banks have to leverage what they've got. The money has been invested [in building branches], they have to make sure they're getting the most yield out of every dollar."