Canadians are growing increasingly dissatisfied with their banks and rising fees are among the main reasons why, says a new study from J.D. Power.
“Record profits for retail banks in Canada are being achieved at the expense of customer satisfaction as customers report increased fees and reduced levels of service in the branch and on the phone,” the marketing research firm said in a statement.
The survey comes after a wave of bank fee hikes earlier this year that affected customers at all of Canada’s major banks.
The average monthly maintenance fee paid by customers of Canada’s big five banks rose to $13.15 this year, from $12.13 a year earlier, the J.D. Power report said. Among customers of mid-sized banks, the average fee rose to $10.21 from $9.70 in 2014.
Customers are also waiting longer for service. The average wait time to see a teller has jumped 50 per cent in the past year, to 5.7 minutes from 3.8 minutes in 2014.
Phone banking customers waited an average of 6.5 minutes to talk to a live rep, compared to 3.7 minutes in 2014.
Overall, the survey found TD Bank has the highest customer satisfaction of any of the major Canadian banks, scoring 746 points out of 1,000. The Bank of Montreal scored lowest, at 727 points.
Among mid-sized banks, Tangerine took the top spot and HSBC Bank Canada took the bottom.
“When a retail bank increases fees and trims back on its core services to customers for the sake of increasing profits, they may be losing touch with one of the most important aspects of their business survival — the customer,” Jim Miller, senior director of the banking practice at J.D. Power, said in a statement.
“Retail banks that make their short-term earnings at the expense of their customers are trading long-term customer loyalty for short-term profits. ... Banks that don’t provide enough value for what their customers are paying are likely to find their customers switching to low-cost competitors, some of which provide great customer service.”
A 2014 report prepared for the Financial Consumer Agency of Canada found that “as Canada’s banks have grown and prospered, questions have been raised about the competitiveness of the fees levied on consumers’ deposit accounts.
“The relatively high level of concentration observed in Canada’s banking sector creates the perception that the market for financial services is not as competitive as it could be; and by extension, there is some concern that a lack of competition might be contributing to fees that are less than optimal for consumers.”
The report said that although bank fee hikes had been "moderate" in recent years, additional charges above and beyond monthly fees jumped by 46 per cent between 2004 and 2013.
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