TORONTO — Small businesses are less satisfied with Canada’s five largest banks than retail customers, says a J.D. Power and Associated study that ranked Scotiabank (TSX:BNS) in top spot in terms of satisfaction among this key banking customer.
The inaugural Canadian small business banking satisfaction study found that overall satisfaction averaged 728 on a 1,000-point scale, 25 points below satisfaction among retail customers.
Respondents who ranked their bank poorly were more than three times more likely to switch banks. That’s a potentially costly decision for financial institutions since small business customers have almost double the deposits of the average retail customer and four times higher loans.
“The in-person experience is extremely important to small businesses and banks need to get it right to maintain and grow these relationships,” said Jim Miller, senior director of banking at J.D. Power.
Scotiabank led the survey with a ranking of 733 points on the scale.
It was followed by Royal Bank of Canada (725), TD Canada Trust (724), Bank of Montreal (711) and CIBC (689).
The study measured small business satisfaction in a number of categories: account activities, account manager, facility, fees, product offerings, account information, credit services and problem resolution.
It found that nearly two-thirds of Canadian banks assign account managers to small business banking customers, compared with just half of U.S. banks.
Yet satisfaction was dragged down severely among small business customer who found their account manager fell short of expectations.
For example, although overall satisfaction was 828 among small business customers who perceived their assigned account manager “completely” understood their business, it dropped to 685 among those customers who perceive their account manager did not fully, or only partially, understood their business.
That, in fact, was lower than overall satisfaction rating (693) among those not having an account manager assigned at all.
The J.D. Power survey polled 1,200 small business owners or financial decision-makers in July and August who used business banking services. Included were the big five Canadian banks — Royal Bank (TSX:RY), Scotiabank (TSX:BNS), CIBC (TSX:CM), Bank of Montreal (TSX:BMO) and TD Bank (TSX:TD).
“Having a relationship manager is a great contributor to small business customer satisfaction, but only when the manager is knowledgeable of the customer’s business and can provide tailored advice and personal attention,” said Lubo Li, senior director of Canadian financial services at J.D. Power and Associates.
“However, if the manager cannot provide valuable and individualized information, the customer is better off not having an assigned account manager at all.”