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First Direct Ranks Highest in Customer Satisfaction with Retail Banks in the UK

LONDON: 24 November 2011 — Despite an environment of cynicism toward banks, overall satisfaction with retail banks in the UK has increased from 2010, according to the J.D. Power and Associates 2011 UK Retail Banking Satisfaction StudySM released today.

The study measures customer satisfaction with banks in the UK based on six factors that drive overall satisfaction: problem resolution; account activities; fees; product offerings; account information; and branch facility.

Overall satisfaction among retail banking customers averages 698 on a 1,000-point scale, up from 683 in 2010. A considerable increase in satisfaction with the branch facility factor has helped drive this improvement. However, satisfaction remains relatively low in three key factors: fees, product offerings and problem resolution.

“It appears that banks have taken action to improve the customer experience, and this effort has paid off,” said Stuart Crawford-Browne, director of the services and emerging industries division at J.D. Power and Associates. “However, retail banks in the UK are still not consistently delivering on customer pain points, such as fees, problems and complaints.”

While overall problem incidence declines slightly from 2010, with 19 percent of retail banking customers experiencing a problem in the past year (compared with 21% in 2010), the negative impact of problems remains large. In fact, 25 percent of customers who have experienced a problem during the past 12 months say they “definitely will” or “probably will” switch institutions in the next year, while just 8 percent of customers who have experienced a problem say the same. More than one-half (55%) of customers who have had a problem or complaint say they are disappointed with the resolution process.

The study finds that problems with poor customer service, fees and service charges have a substantial negative impact on overall satisfaction. In addition, customers who experience a problem are considerably more likely to indicate that their fee structure has changed in the past year (30%, compared with 14% of customers who did not have a problem).

“Retail banking customers tend to be especially dissatisfied with overdraft fees and monthly service charges, particularly the amount of these fees,” said Crawford-Browne. “It’s important for banks to clearly articulate the value customers receive through the benefits, services and features of their banking relationship as a way to mitigate some of the negative sentiment caused by a monthly service fee or overdraft fee.”

The study also finds that while incentives are important in attracting new customers, customer service is key to retention. Fifteen percent of customers say that they selected a particular bank because of an incentive, such as a promotional gift or cash award. However, nearly 40 percent of customers left their bank because of a poor service experience, and an additional 43 percent cite poor service as a top reason for intending to leave their bank.

“While incentives have the short-term benefits of attracting business, that business can go out the back door just as quickly as it comes through the front door if banks aren’t delivering a solid customer experience,” said Crawford-Browne. “Relying on incentives only works if customers are highly satisfied. Banks can reap the benefits of high recommendation and retention rates when customers are satisfied with the service they receive.”

First Direct ranks highest in customer satisfaction with a score of 774,[1] followed by The Co-operative Bank (734) and Nationwide (723). First Direct performs particularly well in four of the six factors: account activities; account information; product offerings; and fees.

The 2011 UK Retail Banking Satisfaction Study is based on responses from 3,899 customers of banks throughout the UK. The study was fielded in September and October 2011.

About J.D. Power and Associates
The European headquarters of J.D. Power and Associates is located in Munich, Germany. With world headquarters in Westlake Village, California, U.S.A., J.D. Power and Associates is a global marketing information services company operating in key business sectors including market research, forecasting, performance improvement, training and customer satisfaction. The company’s quality and satisfaction measurements are based on responses from millions of consumers annually. J.D Power and Associates is a business unit of The McGraw-Hill Companies.

About The McGraw-Hill Companies
McGraw-Hill is a leading global financial information and education company that helps professionals and students succeed in the Knowledge Economy. Leading brands include Standard & Poor's, S&P Capital IQ, S&P Indices, Platts energy information services and McGraw-Hill Education. With sales of $6.2 billion in 2010, the Corporation has approximately 21,000 employees across more than 280 offices in 40 countries. On September 12, 2011, the Corporation announced its intention to separate into two public companies – McGraw-Hill Markets (working name), primarily focused on global capital and commodities markets and McGraw-Hill Education focused on digital learning and education services worldwide. Additional information is available at http://www.mcgraw-hill.com/.

[1] First Direct offers only direct service channels, but customers may utilise the branch network of parent company HSBC. First Direct’s performance in the study includes ratings for First Direct/HSBC ATMs and branch facilities.

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