Credit unions handily beat banks in a recent report on consumer satisfaction.
Credit unions had the highest satisfaction score (91) of any type of institution, followed by community banks (86), large and midsize banks (79) and the four universal banks (72), according to the Consumer Banking Expectations Index.
The report, released Tuesday by the banking-technology company FIS, indicated that the high overall score posted by credit unions is driven "both by outperforming expectations on in-person service and by better-than-average performance for transparency and fairness."
These are areas, FIS noted, where all types of financial institutions underperform, but this is clearly less the case with the credit unions.
U.S. credit unions were also praised for "fulfilling the most important and basic banking requirements: safety and security, fairness, reliability and transparency," and for offering products, which are "simple to understand and use."
Banks Need to Work on Basics
Meanwhile, banks are doing a good job of meeting their customers' demands for modern, high-tech services, but they've got some work to do on the basics, the survey found.
Customers are satisfied with banks' mobile and tech offerings, and with the convenience and connectivity they provide.
But banks in the U.S. are not meeting expectations for safety and security, which customers rank as their highest priorities, the survey said. Financial institutions also received low scores for fairness and transparency.
The results suggest serious concerns around issues like identity theft and the security of personal data, and show how high or hidden fees can damage a bank's reputation. More broadly, it indicates that customers have raised their standards for what they expect from financial institutions, and now banks need to catch up, said Anthony Jabbour, corporate executive vice president for FIS' financial solutions group.
"It's not that the banks are working any less at security or have deprioritized that, but consumers are continuing to raise their expectations," he said.
The index, the first of a planned annual series from FIS, is based on online responses from more than 9,000 retail customers in 9 countries, including 1,000 in the U.S. Respondents ranked the importance of 18 different attributes of their banking provider and rated their satisfaction in each category, which FIS then weighted to calculate overall satisfaction.
An average score of 100 means the customer is satisfied with his or her financial institution; FIs can score above 100 if they exceed expectations. FIS also identified "performance gaps" — mismatches between a customer's expectation and what credit unions and banks are delivering — by calculating the difference between the scores for importance and satisfaction.
The average satisfaction score for financial institutions in the U.S. was 80, suggesting that banks have problems meeting customers' needs. Only about one-third of respondents said their bank was meeting expectations — and most of these banked at smaller institutions.
Quality in-person service was a huge boost for community banks, and ranked as the highest positive difference between expectation and satisfaction for any of the attributes FIS examined.
The challenge for U.S. banks goes beyond improving security. The low scores for fairness, transparency and reliability suggest that high or hidden fees do serious harm to banks' relationships with their customers.