J.D. Power and Associates Reports: Loyalty Among Retail Banking Customers in the UK has Eroded due to Perceptions of Banks Becoming Increasingly Profit-Driven

By J.d. Power And Associates, PRNE
Sunday, November 28, 2010

First Direct Ranks Highest in Customer Satisfaction with Retail Banks in the United Kingdom

LONDON, November 30, 2010 - Retail banking customers in the UK are notably less loyal to their
primary financial institutions than in recent years, due in part to
perceptions that banks are more interested in pursuing profits than
protecting customer best interests, according to the J.D. Power and
Associates 2010 UK Retail Banking Satisfaction Study(SM) released today.

(Logo: photos.prnewswire.com/prnh/20050527/LAF028LOGO-a )

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

In 2010, 12 percent of bank customers in the UK say that they "definitely
will" or "probably will" switch to another bank-an increase of two percentage
points from 2008. In addition, the percentage of customers who indicated they
have switched banks during the past 12 months has increased to 7 percent in
2010, compared with 3 percent in 2008. During the same timeframe, the brand
image of banks has shifted in a negative direction, with customers perceiving
that banks are considerably more profit-driven than customer driven and more
inconsistent than reliable.

"Customers in the UK hold generally negative perceptions of their banks'
motives, particularly regarding the pursuit of profit at the expense of the
best interests of their customers," said Stuart Crawford-Browne, senior
research manager at J.D. Power and Associates. "Overcoming these image
problems will be an important step in salvaging customer loyalty rates, which
are key to ongoing profitability."

The study finds that overall satisfaction amongst retail banking
customers averages 683 on a 1,000-point scale in 2010-considerably lower than
satisfaction levels in other industries in which J.D. Power and Associates
conducts studies in the UK. In comparison, satisfaction among new-vehicle
owners and auto insurance customers in the UK averages 789 and 708,

In 2010, 21 percent of bank customers indicate that they have had a
problem or complaint with their bank during the past 12 months. Compared with
2008, problems with poor customer service and website issues have increased
more than other problem areas. Among customers who have experienced a
problem, only 69 percent say that their issue was resolved. In addition,
customers indicate they must contact their bank twice for their problem to be
solved. Only four in ten customers who experienced problems say that they
were provided with an estimate of how long it would take to resolve their
issue. Furthermore, for approximately one in five of these customers, the
timeline was not met. In comparison, average problem resolution times for
customers of UK banks are nearly twice as long as those of customers of banks
in the United States.

"Low levels of satisfaction with banks may be reflective of recent
negative media coverage surrounding fees, tight credit and disparity in
interest rates, as well as customer perceptions that banks assume that
customers will put up with poor service," said Crawford-Browne. "Despite
efforts by many banks to become more customer-focused, there still appears to
be a gap between accountholder expectations and banks' ability to deliver on
them. While UK bank customers historically have been slow to switch primary
financial institutions, their frustration is mounting. It is increasingly
likely that customer patience will reach a breaking point and, unless things
change, take their accounts away from high street banks and go to
institutions that will listen to and accommodate their needs."

First Direct ranks highest in customer satisfaction with a score of
766,(2) followed by The Co-operative Bank (759) and Nationwide (710). First
Direct performs particularly well in three of the six factors: account
activities, account information and product offerings. The Co-operative Bank
performs particularly well in the fees and problem resolution factors.

"High-performing banks have differentiated themselves from the rest by
offering simplicity, accessibility and personal service and cultivating an
image that is customer-focused and conveys empathy to customer needs," said
Crawford-Browne. "Considerable changes are occurring in the banking
industry-including new entries to the marketplace-and it will be interesting
to see if banks are able to evolve along with changing customer

The study finds that highly satisfied customers (scores averaging 850 or
higher) are 10 times as likely to recommend or use additional services with
their bank, compared with dissatisfied customers (scores averaging 600 or
lower). Highly satisfied customers are also more loyal, and are six times
less likely to switch banks compared with dissatisfied customers.

For ratings for banks in the UK, as well as tips for consumers on
selecting a bank, visit JDPower.com.

The 2010 UK Retail Banking Satisfaction Study is based on responses from
3,975 customers of banks throughout the United Kingdom. The study was fielded
in October 2010.

(1) Source: J.D. Power and Associates 2010 UK Vehicle Ownership
Satisfaction Study(SM) and J.D. Power and Associates 2010 UK Auto Insurance

(2) First Direct offers only direct service channels, but customers may
utilise the branch network of parent company HSBC. Therefore, performance for
First Direct includes ratings for First Direct/HSBC ATMs and branch

    Customer Satisfaction Index Ranking   J.D. Power.com Power Circle Ratings
    (Based on a 1,000-point scale)        For Consumers

    First Direct                    766    5
    The Co-operative Bank           759    5

    Nationwide                      710    4

    Royal Bank of Scotland (RBS)    689    3
    Barclays                        686    3
    HSBC                            683    3
    Industry Average                683    3
    Bank of Scotland                680    3
    Lloyds TSB                      679    3
    Halifax                         678    3
    NatWest                         674    3
    Clydesdale Bank                 663    3

    Yorkshire Bank                  658    2
    Santander                       646    2

NOTE: First Direct offers only direct service channels, but customers may
utilise the branch network of parent company HSBC. Therefore, performance for
First Direct includes ratings for First Direct/HSBC ATMs and branch

    Power Circle Ratings Legend:

    5 - Among the best
    4 - Better than most
    3 - About average
    2 - The rest

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, Web intelligence 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:

Founded in 1888, The McGraw-Hill Companies (NYSE: MHP) is a global
information and education company providing knowledge, insights and analysis
in the financial, education and business information sectors through leading
brands including Standard & Poor's, McGraw-Hill Education, Platts, and J.D.
Power and Associates. The Corporation has more than 280 offices in 40
countries. Sales in 2009 were $5.95 billion. Additional information is
available at www.mcgraw-hill.com/.

    Media Relations Contacts:
    Hannah Smith; Ruder Finn UK; +44-207-462-8949; hsmith@ruderfinn.co.uk
    John Tews; J.D. Power and Associates; +1-248-312-4119;

No advertising or other promotional use can be made of the information in
this release without the express prior written consent of J.D. Power and
Associates. www.jdpower.com/corporate.

Hannah Smith of Ruder Finn UK, +44-207-462-8949, hsmith at ruderfinn.co.uk; or John Tews of J.D. Power and Associates, +1-248-312-4119, media.relations at jdpa.com

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