The 2017 CFO Commercial Banking Survey
When one of an industry’s largest, reputable providers is found to have deceived — indeed, scammed — its customers, the whole industry suffers.
Commercial banking has had character issues in the wake of the financial crisis, but in 2017 the issue of trust arose once more with the Wells Fargo fake account scandal. The bank’s salespeople opened as many as 3.5 million fake bank and credit card accounts, slapping customers with unnecessary fees. The scandal, which goes back years, aroused skepticism about banks and whether they could be trusted: once again, a financial institution had showed disdain for those it purported to serve.
It’s not surprising, then, to see the after-effects of the scandal seeping into the results of the fourth annual CFO Commercial Banking Survey. Year after year, the survey’s respondents have indicated that the secret to being a great commercial bank is customer service, especially at the account manager or relationship manager level. That still matters, but what was more notable this year were the increased importance of “reputation and brand” and “value for fees charged.” If there’s one thing business executives want, in other words, it’s a bank they can have faith in.
The survey, conducted by CFO Research in September and October 2017, garnered 253 responses. Respondents (30% of which were CFOs and 32% CEOs) were asked to score their current commercial banks on strategic partnership, customer relationship, lending/availability of capital, transaction/payments processing, and internal reporting/connectivity.
Generally, executives responding to the survey thought banks were doing a decent, if unspectacular, job. The average overall score for the service attributes listed above was 7.0 on a scale of 1 to 10, down from 7.43 in 2016.
In the individual categories, JPMorgan Chase scored the highest in customer relationship (8.2) and transaction/payments processing (8.5). BB&T was the top scorer in strategic partnership, with a 7.4, and TD Bank tallied the highest for lending/availability of capital, at 7.8. Citibank rounded out the high scorers with a 7.9 for internal reporting/connectivity.
Similar to 2016, about 56% of respondents said they would strongly recommend their commercial bank to another executive. What makes a bank recommendable? Some executives noted global capabilities, technology platforms, and industry knowledge, but those are mostly table stakes. The anecdotal evidence is that what separates the best banks are the personal aspects. One respondent noted that his company had been with its bank for more than 20 years. “Our relationship managers have met with us and given us the service the bank should,” the executive explained. (See “Ranking the Banks” at the end of this story.)
Adept problem-solving is another trait of a recommendation-worthy bank. “There are many challenges in day-to-day interactions,” said one executive of the experience with his bank. “But once [problems are] brought up, my branch will step up and make things right.” Said another executive of his financial institution: “They take the time to get to know you as a person and not just a number of the bank. They do all the normal bank things fine; they just go above and beyond to get to know the customer.”
“Above and beyond” was a pervasive theme, and the actions that merit that description ranged from the mundane (“ensuring that employees have access to ATMs with their corporate cards while traveling overseas”) to life-changing. “During a very difficult time in 2004 and again in 2008, the world felt like it was crashing in on us, and the support from our bank was exactly what we needed,” wrote one executive.
Respondents also were asked to rate their overall satisfaction with their existing banks. On a scale of 1 to 100, finance executives that bank with JPMorgan Chase rated it the highest at 82. Citibank earned the second-highest satisfaction score (80.1), followed by PNC Bank (74.4) and TD Bank (72.5). Not surprisingly, Wells Fargo scored the lowest of any systemically important financial institution.
A few smaller 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 Frost Bank, Regions Bank, and KeyBank.
In addition to their own banking relationships, executives were asked to judge which of the largest U.S. commercial banks were best at satisfying customers. From a list of the top 10, measured by consolidated assets, respondents selected the 4 (in order) they would award this status. Then, a weighted scoring system was applied to the survey results to create an overall numerical ranking.
A perception ranking allows the survey to reflect not just first-hand customer experiences, but also the wide range of additional information that business people use to form an impression of a financial institution, whether or not their companies bank there.
In the resulting ranking (see “Tops in Satisfaction,” above), JPMorgan Chase nabbed the top spot, as it did in 2016, with Bank of America launching over scandal-plagued Wells Fargo to secure second place. Wells Fargo fell two notches, to fourth. Other institutions improving over their 2016 ranking were Capital One, Citibank, and Bank of New York Mellon.
What qualities are most important when working with a commercial bank? After “value for fees charged” and “account management and customer service,” “reputation and brand” now catches a business customer’s eye, ahead of both “range of services offered” and “ease of use.” There is no substitute for a bank that is trustworthy, it seems. However, trust is not an easy thing for a bank to earn.
The failure of banks to deliver on promises, especially those tied to their willingness to lend, is particularly distasteful to commercial customers. One executive described a bank that expressed a desire for “programmatic growth in balance-sheet lending to help fund [the customer’s] growth.” After the company switched its accounts, the bank demanded all of the company’s no-risk, fee-based business, “while in the same breath saying that they really are only interested in using their balance sheet for portfolio-level transactions.”
The experience of other executives, however, proves that financial institutions can be true business partners. One respondent wrote of a bank that “stayed with [his business] during a catastrophic event without calling the loan under the default provision. The bank understood … and did not add to the issues by being nervous nellie pains-in-the-backside,” he said.
Hoping for Better?
Where are commercial banking relationships headed? While about 52% of respondents said their organizations’ relationships with their commercial banks hadn’t changed over the past five years, 22% said those relationships had become “much more” or “somewhat more” difficult. And 20% of respondents said their organizations had added or ended a major commercial banking relationship in the last two years. But some executives appear hopeful that their banks will do better in the next two years, with nearly 24% saying their companies’ relationships with their commercial banks would become “somewhat” or “much” easier.
Should companies hold out for a financial institution that can win their trust? Absolutely. But perhaps the best information from survey respondents is that businesses should do their due diligence when selecting a bank, and stick to what they can control.
“As we continue to grow and become more financially sophisticated, we have greater access to partners with improved technology, allowing for greater efficiency,” said one executive. Added another: “We have a demonstrated track record of success, and ultimately [now] present our banks with a more attractive risk-adjusted reward profile.”
No banker wants to see a creditworthy, profitable customer leave — that’s one banking truth businesses can rely on.
Vincent Ryan is editor-in-chief at CFO.
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