ANN ARBOR, Mich.– Is the surge of new members at credit unions coming with a price? Consumer satisfaction with credit union has declined and is rated just barely ahead of that at small and regional banks in a new analysis.
The findings were released as part of the American Customer Satisfaction Index (ACSI), which found overall customer satisfaction with the finance and insurance sector continues its slide. The sector, which includes banks, credit unions, life insurance, health insurance and Internet investment services, falls 0.4% to 74.8 on ACSI’s 100-point scale, its lowest score in a decade.
In its analysis, ACSI suggested, “credit unions are struggling to stay ahead of small banks amid an influx of new members. As credit union membership surpasses 101-million, (member) satisfaction with credit unions is down 4.7%to 81.” That’s just one point ahead of regional and community banks.
“Smaller, more nimble companies that can provide a more personalized experience tend to perform better than large corporations,” said David VanAmburg, ACSI Director. “This has been the advantage for the credit union industry, which for years has led banks by a wide margin in ACSI. But as credit unions add large numbers of new members, they may struggle to maintain better service levels compared with traditional banks, particularly small community banks, which now nearly tie credit unions.”
ACSI said its data show that both smaller banks and credit unions provide similar service levels that far exceed large national banks across most elements of the customer experience—including staff courtesy, transaction speed, service variety and competitiveness of interest rates. National banks, by virtue of their size and resources, maintain an advantage in just two areas: number of branch locations and ATMs.
Not 'Happy Times'
“These are not happy times,” said Claes Fornell, ACSI Chairman and founder. “Insurance companies and credit unions are joining the troubling trend of deteriorating customer satisfaction that we’ve seen throughout most of the U.S. economy. Corporations facing increasing earnings and revenue pressure keep raising premiums and fees, which, combined with cost cutting to maintain profitability, is having a negative effect on service and on customer satisfaction. What might look good on the balance sheet in the short term is not helpful for long-term prosperity.”
Customer satisfaction with banks is unchanged at an ACSI score of 76, despite cost cutting and rising fees for out-of-network ATMs. National banks earned an ACSI score of 72, significantly below the average for super regional banks (76), which are smaller than national banks, but still outsize regional and community banks. Among the largest national banks, the gap from top to bottom grows, said ACSI. Only Wells Fargo Bank improved, gaining 4% to an ACSI score of 75. The remaining three largest banks deteriorated as Citibank dipped 1% to 73 and Chase retreated 4% to 71. Bank of America fell further behind after slipping 1% to 68.
Super regional banks are included in the ACSI by name for the first time this year, and the leaders of this group rank far ahead of their national counterparts. Regions Bank was the highest scoring among super regionals at 79, just ahead of PNC Bank (78) and the duo of BB&T and Capital One (tied at 77). U.S. Bank matched the average of all banks at 76. Fifth Third Bank and TD Bank posted matching scores of 75, while SunTrust Bank comes in at 74, ACSI reported. Citizens Bank made a lackluster debut at 70.
Regional and community banks, measured in aggregate, are the highest-scoring category in retail banking at 80.
Insurance
Beyond financial services, the ACSI surveyed also included insurance companies. It found that the Affordable Care Act has delivered millions of customers to health insurance companies, but the industry drops 1.4% to 69, among the bottom five industries measured by the ACSI and ahead of only ISPs and the pay TV industry. Many of these new customers hold individual policies that provide a minimum of coverage with high deductibles. Customer satisfaction for individual policy holders slumped 4% to 71, but consumers with group coverage are less happy (68). Among group policyholders, however, choice makes a difference. Those who are offered a choice of plans (70) were more satisfied than those without choice (65).
“More Americans get group coverage through their employer, where they typically do not have a choice of provider,” said VanAmburg. “As is generally the case, satisfaction is lower in industries where there is little or no choice.”
The aggregate of smaller health insurers dropped 3% to tie new entrants Humana and Kaiser Permanente at 71, followed by Blue Cross and Blue Shield (+1% to 70), Anthem (+5% to 69) and Aetna (+5% to 68). UnitedHealth was the top-scoring large insurer only a year ago, but now comes in near the bottom of the category, tumbling 8% to 66. Cigna debuted in last place with an ACSI score of 60.
Customer satisfaction was unchanged at 79 for property and casualty insurance. Customers who bundle their auto and homeowners coverage together were more satisfied on average (78) than those purchasing only auto insurance (76) or homeowners (75). Smaller companies provided better service, as the aggregate of smaller insurers gained 5% to 83, followed by new entrant Farm Bureau at 80. Meanwhile, the nation’s biggest P&C insurer, State Farm, dropped 4% to 78 while GEICO held steady at 77.
The rest of the P&C industry was led by ACSI newcomers AAA and Nationwide, both tied at 75. Progressive as down 3% to 74, while Allstate fell 5% to 73. The remaining three new additions to the ACSI all come in at 73: American Family, Liberty Mutual and Travelers. Farmers registered the biggest decline, falling 8% to the bottom of the category at 71.
Internet Investment Services
Internet investment services, which include online brokerages and investment research companies, plunged 7.3% to an ACSI score of 76. “Market turmoil over the summer sparked a flurry of activity as investors tried to stay on top of volatility in stock prices, leaving some customers unable to access their trading accounts,” ACSI said.
“Customer satisfaction with Internet investment services ebbs and flows with the market, but some companies do better than others regardless of market conditions,” noted VanAmburg.
The ACSI report, which is based on 9,202 customer surveys collected in the third quarter of 2015, is available for free download at www.theacsi.org/news-and-resources/customer-satisfaction-reports/reports-2015/acsi-finance-and-insurance-report-2015.