The 2016 CFO Commercial Banking Survey
What makes a bank earn the respect and loyalty of its corporate customers? In the middle of and just after the financial crisis, many CFOs would have said “a bank with a relatively low-risk balance sheet that won’t pull my line of credit without warning.” But with U.S. financial institutions having built larger capital buffers and de-risked their portfolios, the answer has changed. For the third year in a row, the results of the CFO Commercial Banking Survey showed that there’s no secret to being a top-notch bank: it’s all about the service.
The survey, conducted by CFO Research in September 2016, garnered 325 responses that recorded 516 bank rankings. Participants were asked to score their current commercial banks on strategic partnership, customer relationship, lending/availability of capital, transaction/payments processing, and internal reporting/connectivity.
Notable in the results this year were high-scoring super-regional or regional banks, including Silicon Valley Bank and BBVA Compass. (See “Service Minded,” below.) They did particularly well in the “strategic partnership” and “customer relationship” categories.
Generally, finance executives think banks are doing a fairly good job. The average overall score for all service attributes was 7.43 on a scale of 1 to 10; that’s more than half a point higher than in last year’s survey. In addition, 56% of respondents said they would strongly recommend their commercial bank to another senior finance executive.
When asked to explain what makes a bank recommendable, one respondent cited relatively simple criteria: “Wells Fargo, aside from its recent debacle, has always treated me and my company with great deference and made few (very few) errors. I don’t think you can ask much more from a bank than that. The few times I’ve asked the bank to rush a deposit, it’s been willing to do so, even at its own risk.”
Indeed, banks largely earn client recommendations based on the actions of their account or relationship managers, signs of a market in which the products are commoditized. “Our account managers are in our business all the time, are easily accessible on their cellphones, and our requests and issues get dealt with promptly,” said one finance executive.
“The secret is in the relationship manager,” echoed another. “I happen to have ‘hit’ with a couple of managers who have taken the time to understand the strategic requirements of the business and provide the capital to fund those.”
In terms of overall satisfaction with their individual banks, on a scale of 1 to 100, finance executives that bank with Silicon Valley Bank rated it the highest at 89.9. BBVA Compass earned the second-highest satisfaction score (87.1), followed by Regions Bank (81.4), SunTrust (80.3), and BB&T (80.1). Among the systemically important, largest banks, U.S. Bank had the top overall satisfaction score among its clients at 78.2; Citibank had the lowest (61.1).
A few banks were rated very highly on individual service attributes, overall customer satisfaction, or both, but lacked a sufficient number of responses to be named as aggregate higher scorers. They included City National Bank, Frost Bank, and M&T Bank.
In addition to their own banking relationships, finance executives ranked the largest U.S. commercial banks in terms of perceived customer satisfaction. From a list of the top 10 U.S.-chartered commercial banks, measured by consolidated assets, respondents selected the 4 (in order) they think are best at satisfying customers. Then, a weighted scoring system was applied to the survey results to create an overall numerical ranking, from 1 through 100.
Why a perception ranking? It allows the survey to reflect not just first-hand customer experiences, but also the wide range of additional information that CFOs use to form an impression of a bank.
The resulting ranking (see “Delivering Satisfaction”) closely resembled that of 2015. JPMorgan Chase beat out Wells Fargo once again in a close race for the top spot. Bank of America held onto the third spot, and Citibank, despite poor marks from some of its own customers, came in fourth. PNC Bank inched ahead of U.S. Bank for fifth, and State Street fell to last place this year (after beating out Bank of New York Mellon and placing ninth in 2015).
What CFOs Want
Which characteristics are most important to finance executives working with a commercial bank? The survey results were almost exactly the same as 2015’s: good account management and customer service; values for fees charged; and ease of use. (See “Winning Qualities,” below.) Simple to achieve, right? Not necessarily.
If we had to sum up in one word the many complaints from finance executives about banks’ service, that word would be “inflexibility.” Wrote one finance executive, “The customer seems to have to fit into a preconceived methodology of transacting business instead of the other way around, and there is great lack of flexibility on the part of most major banking institutions.”
Said another, about access to capital: “When I have requested to borrow money they make a decision based on elementary financial ratios rather than actual cash flow and profitability. They do not take the time to understand my industry or specific financials.”
But what really seemed to irk finance executives was when banks appeared unaccommodating at enforcing regulations. “Bank [X] seems to be becoming more and more rule-driven and inflexible in dealing with day-to-day transactions,” commented one unhappy customer. “They recently rejected a completely legitimate deposit because someone at the branch did not like the endorsements.”
Another executive switched banks because their financial institution “insisted that our Canadian executives travel back to the U.S. to change signers on our bank accounts, in person at a branch, even though they had already verified their identities through corporate documents, social security numbers, driver’s licenses, and passports. None of our other banks insisted on this.”
Of course, the open-ended responses weren’t all negative. More than a few went like this: “My banking institution understands the value of customer service and good communication skills. They will to work to make a deal come together for the benefit of all parties.”
Do financial institutions emphasize the quality of client service as much as clients do? We see much evidence to the contrary. Those banks that don’t emphasize service may want to rethink their strategies: 28% of respondents said they have added or ended a commercial banking relationship in the last two years. In addition, 25% said they expect the nature of their organization’s relationship with their commercial bank to become “somewhat” or “much more” difficult in the next two years. With many banks failing to earn their respect and loyalty, some corporate clients are clearly up for grabs.