Overall customer satisfaction with retail banks in Canada has improved from 2009, as Canadian banks have increased investment in technology and customer service systems improvements following the global financial crisis, according to the J.D. Power and Associates 2010 Canadian Retail Banking Customer Satisfaction Study released Thursday.

Overall satisfaction with primary financial institutions averages 730 on a 1,000-point scale in 2010 — up 9 points from 721 in 2009.

With minimal exposure to the global financial crisis, many Canadian banks have reported strong quarterly earnings in 2010, and have increased their business expansion efforts, including investment in technology and customer service.

“In order to maintain their respective competitive advantages, Canadian banks are acquiring new assets in Canada and foreign markets,” says Lubo Li, senior director of the financial services practice at J.D. Power and Associates. Toronto. “These banks are also adopting new customer service standards and processes to improve customer experiences across all channels — ranging from in-branch to online — which has resulted in the overall increase in customer satisfaction in 2010.”

Fuelled by the introduction of Tax Free Savings Accounts and rapid growth of the discount brokerage channel, Canadian banks have significantly expanded their penetration in the wealth management business. In 2010, 48% of customers indicate they hold investment accounts at their primary financial institutions, compared with 36% in 2009. In addition, customer satisfaction with the investment accounts at their banks has also improved, with the rate of improvement being notably higher among Big 5 banks.

The study finds that achieving high levels of overall satisfaction has a strong positive effect on bank customer loyalty and commitment, as well as share of wallet. Among customers with high levels of satisfaction (averaging 849 and higher), approximately three-fourths indicate they “definitely will” recommend their primary financial institution and use it for additional banking services. Among customers with low levels of satisfaction (averaging below 601), these figures decline to 8% and 12%, respectively.

Now in its fifth year, the study examines customer satisfaction with their primary financial institutions in three segments: the Big 5 banks, mid-size banks and credit unions. In all segments, customer satisfaction is measured across six factors (listed in order of importance): account activities; product offerings; account information; facility, fees; and problem resolution.

TD Canada Trust ranks highest in overall customer satisfaction among Big 5 banks for a fifth consecutive year, achieving a score of 748. TD Canada Trust performs particularly well in all six factors driving overall satisfaction.

Among mid-size banks, President’s Choice Financial ranks highest for a fourth consecutive year, with a score of 771. President’s Choice Financial performs particularly well in five of the six factors: account activities; product offerings; account information; facility; and problem resolution.

The study finds that although overall satisfaction has increased from 2009, loyalty intent among retail banking customers has decreased slightly in 2010. This suggests that as the market has become increasingly competitive and customers have been provided with more choices, they have become less committed to their primary banks and are willing to reevaluate their bank relationships.

The 2010 study is based on responses from 14,583 customers who use a primary financial institution for personal banking. The study includes the largest financial institutions-banks and credit unions-in Canada and was fielded in March and June 2010.

IE