A Case Study of Customer Satisfaction among US Regional Banks
Akash Dania, Ph.D.School of Business
Alcorn State University
Albert SampanaSchool of Business
Alcorn State University
2015 Annual Academy of Economics and Finance ConferenceJacksonville, FL
Presentation outline
• Introduction• Purpose and Research Questions• Data and Methodology• Analysis of Data• Conclusion• Discussion, Q&A
Introduction
• The U.S. sub-prime lead global financial crisis of 2008, has renewed academic and practitioner interest in the area of banking sector.
• Tightened liquidity squeeze and ensuing financial crisis prompted the Federal Reserve to provide liquidity to major U.S. banks to ensure they do not fail.
• The Fed conducted open market operations to ensure member banks have access to funds, and there is sufficient liquidity.
• Over these past 6 years big banks have become bigger in size (in market share and product offerings) and have making the traditional banking industry competitive.
Introduction – big banks
• Technology advancement, changes in banking laws, and efficiencies accumulated by banks over past decade has made physical presence or brick and mortar banking irrelevant to a large extent.
• Even if a major bank does not have a physical presence in a geographical location, they have made inroads due to e-banking services they offer.
• This has created severe competitive challenge for ‘regional’ banks which otherwise had advantage of operating in largely township or rural setting areas.
• In this context, customer service has become an important issue for regional banks to otherwise may not match the investment in technology or a large bank or the line-up of their services.
Introduction – Purpose of our study
• This research is an attempt to assess the level of customer service among small regional banks – taking the case of rural setting Mississippi/Louisiana banks (located in the Miss-Lou region). Survey based.
• Customer service is extremely important in building customer loyalty – the only advantage regional banks often have over large banks.
• Competitive of Interest rates being as Elements known to build customer loyalty with respect to banking sector are: Personal and respectful treatment, Custom responsiveness, Technical excellence, Problem-solving approach and Flexibility (large banks aim to achieve these via range of services, technical superiority, and often phone support).
• In addition, the rewards of securing greater customer loyalty can be substantial, on the order of $10,000 more in net present value over the lifetime of an affluent U.S. customer (Bain & Co., 2012).
Typical Cycle of Customer Satisfaction
Concept of Customer Dissatisfaction
According “American Customer Satisfaction Index”
Measurement of Satisfaction Level
Customer Experience
Customers Assessment
Assessment of Bank Personnel
What customers want
• Respectful treatment • Responsiveness• Technical excellence • Focus on Problem-solving • Flexibility• Prompt recovery
The LARSONS approach to handle difficult customers• L= Listen• A= Agree• R= Repeat, Restate• S= Seek Resolution• O= Offer Sincere Apology• N= Now Take action
Recommendation to Regional Banks
• Customer satisfaction is very important. • Ensures customer loyalty, retention to the large extent and
also serves as a catalyst against business failure in the long run.
• In recent highly competitive and dynamic environment it beholds on financial institutions have satisfied customer and retain them to survive and compete with other market players successfully.
• The future is going to be very competitive and challenging for small banks in southwest Mississippi which may result into thousands of layoffs, less physical buildings and more technological equipment's.
• Better customer satisfaction tools should be employed to make banking better in the southwest Mississippi and also serve as a catalyst for future success
Discussion, Questions
