Consumers are Displeased with Finance Sector: U of Michigan ACSI Report

Americans' satisfaction with the goods and services they buy improved in the fourth quarter of 2008, according to the American Customer Satisfaction Index (ACSI). The index climbed to 75.7 on the ACSI's 100-point scale, up 0.9 percent from the previous quarter. For banks and other financial services providers, however, the picture is not quite so rosy.

The ACSI is a national economic indicator of customer evaluations of the quality of products and services available to household consumers in the U.S. Every fourth quarter ACSI measures customer satisfaction with retail, finance and insurance, and e-commerce.

The latest findings show consumers are less than happy with their banks when compared to last year's results. Although finance as a whole showed a small increase of 0.7 percent over last year mainly due to gains in the health insurance industry, consumer satisfaction with banks fell 4 percent to an ACSI score of 75 out of 100. This most likely was a result of cost-cutting related to the mortgage crisis, such as branch closures, staff reductions and the confusion typical among consumers in the aftermath of M&A activity. This marks a 3.8 percent decrease, according to the study.

Wachovia, included for the last time in ACSI before becoming a part of Wells Fargo, leads the industry but still fell 4 percent to 76. Wells Fargo climbed 4 percent to 72 and Citigroup rounds out the bottom at 69.

This quarter also marks the debut of credit unions in ACSI and so far, they've made a good first impression. According to the research, credit unions outstripped banks in customer satisfaction with a score of 84. ACSI attributes this score to credit unions' smaller size relative to most banks. As such, the researchers conclude, they follow a similar pattern of smaller companies in other industries that tend to offer better, more individualized service.

Online brokerage companies were also measured in the fourth quarter and showed disappointing results. They plummeted 6.3 percent to 74, dragging down the e-commerce sector and halting a three-year climb in that area.

Although the index showed some improvement overall in retail, the researchers remain cautious as the current recession deepens. As this occurs, consumer behavior has changed much more than in earlier economic slowdowns. Consumer spending has continued to weaken while savings have increased suggesting, says the reports, that at least for the short term there will be less revenue for sellers and more pressure on profit margins and for cost reductions.

The overall ACSI score for a given quarter factors in scores from about 200 companies in 44 industries, and from local and federal government services over the previous four quarters.