Retail Banking Satisfaction Improves Significantly; Decline in Loyalty Creates Both Risk and Market Opportunities for Retail Banks
Bank of Communications Ranks Highest in Retail Banking Customer Satisfaction
Shanghai: 16 July 2015 — While customer satisfaction with retail banks in China has improved significantly in 2015, an increase in the number of consumer banking options has made financial institutions vulnerable to losing current customers and has created a market opportunity for retail banks, according to the J.D. Power 2015 China Retail Banking Satisfaction StudySM (RBSS).
Now in its seventh year, the study measures customer satisfaction with their bank across six factors: transactions; product offerings; account information; facility; fees; and problem resolution. Additionally, the study examines performance improvement initiatives designed to drive customer loyalty and advocacy.
Customer satisfaction with retail banks averages 787 points (on a 1,000-point scale) in 2015, a 34-point improvement from 2014. The annual improvement is primarily driven by significant increases in satisfaction across three factors: fees (+51 points); problem resolution (+37); and product offerings (+34).
The implementation of the “Measures for the Administration of the Service Prices of Commercial Banks” by the China Banking Regulatory Commission (CBRC) and the National Development and Reform Commission (NDRC) in August 2014, which mandates that banks reduce or eliminate bank charges such as interbank transfer fees, annual fees and account management fees, is likely to have influenced the improvement in satisfaction with fees among retail banking customers.
The banking industry’s efforts to improve fee transparency has positively impacted customer understanding of their fees, with 71 percent of customers saying they are “well informed” about the fees—an increase from 64 percent in 2014—and 74 percent indicating the fees are reasonable, up by 7 percentage points from 2014.
However, satisfaction with bank fees and fee transparency does not guarantee customer loyalty and advocacy, which is especially true among highly satisfied retail banking customers(overall satisfaction scores of 869 points and above). According to the study, 46 percent of customers who are highly satisfied with their bank say they “definitely would” stay with their current bank in the next 12 months—a decline from 54 percent in 2014—and 53 percent of them “definitely would” recommend their current bank to friends and family in the next 12 months, down from 57 percent last year.
“Today, retail banking customers in China have more types of investment and financial choices available to them than ever before, such as peer-to-peer lending platforms (P2P), Internet banking and brokerage firms, which has created additional pressure for banks to acquire and retain customers,” said Steven Zou director of the services industry at J.D. Power, Beijing.“ In this environment, customers have become more demanding and less loyal. Not only do retail banks need to improve the overall customer experience, but they also need to be innovative and provide digital branches, e-banks and customized products and services to retain their customers.”
Retail Banking Customer Satisfaction Ranking
- For the second consecutive year, Bank of Communications ranks highest, with a score of 837. Bank of Communications performs particularly well in the most impactful factor, transactions (41 points above average) and facility (47 points above average).
- China Minsheng Bank (830) ranks second and performs well in fees (101 points above average). Ping An Bank (825) ranks third, performing well in product offerings (66 points above average).
- Among the major four state-owned banks (Bank of China, Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank), Industrial and Commercial Bank of China receives the highest score in customer satisfaction.
The 2015 China Retail Banking Satisfaction Study examines 15 banks operating in China and is based on responses from 10,461 retail banking customers in 30 cities. The study was fielded between March and May 2015.
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 The study was redesigned in 2014 to include only one award. In previous years, the study included two segments: shareholder banks and state-owned banks.