Yahoo Finance Customer satisfaction falls at largest banks as Canadians feel worse off
Scores were based on factors like trust, customer service, and account offerings
As Canadians feel worse off financially amid higher interest rates and persistent inflation, they are also becoming increasingly dissatisfied with the country's five largest banks.
According to J.D. Power's 2023 Retail Banking Satisfaction Study, released on Thursday, overall customer satisfaction at Canada's five biggest banks has fallen from last year, as more than a quarter of Canadians (28 per cent) report feeling worse off financially than in 2022. The report found that average customer satisfaction at the largest banks dropped 10 points from last year to 603 (on a 1,000-point scale), while customer satisfaction at mid-sized banks slipped seven points to 637 (on a 1,000-point scale.)
Customer satisfaction scores were based on seven factors, including trust; customer service; account offerings; allowing customers to bank how and when they want; saving time and money; digital offerings; and problem and complaint resolution.
The Bank of Montreal (BMO.TO) had the highest customer satisfaction score of its peers, with a score of 612 out of 1,000, followed by the Royal Bank of Canada (RY.TO), with a score of 610, and the Canadian Imperial Bank of Commerce (CM.TO), with a score of 604. Both the Bank of Nova Scotia (BNS.TO) and the Toronto Dominion Bank (TD.TO) had scores below the segment average, at 597 and 594, respectively.
The declining performance of the country's largest banks comes as more Canadians struggle financially. The survey found that half of Canada's banking customers are considered financially vulnerable or stressed, up from 44 per cent in 2022. J.D. Power noted that "these customers decreasingly feel their banks' account offerings meet their needs, which contributes to overall decline in satisfaction."
"Customers are under increasing economic stress and express a declining feeling that banks are addressing their concerns and financial challenges," Paul McAdam, senior director of banking and payments intelligence at J.D. Power, said in a statement. He says customers want banks to communicate on how to avoid fees, build savings and reduce debt, as well as resolve problems efficiently.
"The financial institutions that rank highest are those that effectively communicated about fees, fraud and savings; that provided tools and information about budgeting and debt reduction; and addressed security and fraud problems in a timely manner," McAdam said.
The study found that more customers have been paying fees in the last year, and nearly 80 per cent of those say banks could do a better job communicating how to avoid paying fees. The report also found that branch service, as well as satisfaction with online and mobile banking, have declined. And while few customers plan to switch from their current bank, few are also likely to recommend their banking institution to family or friends.
Another issue for lenders appears to be fraud handling. The report found that fraud and unauthorized account activity increased three percentage points from 2022 to account for 14 per cent of total problem volume experienced by customers. Customer satisfaction with how the banks handled the fraud-related problem declined sharply by 32 points, the report says.
Of the mid-sized banks, Scotiabank-owned Tangerine Bank had the highest score at 684, followed by CIBC's Simplii Financial (650) and ATB Financial (638). Desjardins (619), National Bank of Canada (617), and HSBC Bank of Canada (602) each had customer satisfaction scores below the segment average.
The report is based on responses from 13,960 retail banking customers of Canada's large and mid-sized retail lenders. It was conducted in two phases, between January and February 2023, and between July and August 2023.
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.
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