New Index Ranks the Best Positioned Financial Institutions to Drive Organic Growth

A.T. Kearneys Organic Growth Index, to be created annually, is based on a survey conducted by Harris Interactive of more than 4,000 adult banking customers in the 20 largest U.S. metro markets. The index provides unique insight into which financial institutions have a strong hold on their customers and a significant portion of their customers personal balance sheets. It measures customer momentum -- an institutions ability to attract and retain customers -- and wallet momentum -- an institutions ability to capture, retain and grow its share of customers assets and liabilities. The Organic Growth Index connects customer attitudes and actions with their wallet allocation decisions and measures eight components that are critical for achieving organic growth. Results are compiled into two primary measurements to comprise the index -- customer momentum and wallet momentum. Customer momentum measures an institutions ability to forge long-lasting customer relationships and instill advocacy among their customers. Wallet momentum measures an institutions ability to expand the number of products and drive greater penetration per product with its customers. The Organic Growth Index ranks 31 financial institutions based on their ability to achieve both customer and wallet momentum. Retail banks and investment firms both performed well in the study, although no single type of financial institution -- retail bank, diversified institution or investment institution -- excelled in all drivers of organic growth. Retail banks achieved greater customer attraction and retention, while investment firms controlled a larger share of customers wallets. Leading Institutions Each of the top six institutions were among the leading institutions in at least two of the indexs components. American Express -- which customers identified as a top performer before the spin-off of its financial planning unit -- was particularly strong in customer intent to increase account value and customer advocacy (willingness to recommend institution). Bank of America, Wachovia and Washington Mutual were strong in service quality. Charles Schwab, A.G. Edwards and American Express controlled more than 60 percent of their customers financial balance sheet. Despite these strengths, however, each of the top six institutions also showed vulnerabilities in certain areas. A.G. Edwards and Wachovia, for example, were below average in customer advocacy. Bank of America and Washington Mutual both control relatively smaller shares of their customers wallet compared to other top performers. American Express and Charles Schwab had below average scores on error rate. The study found that customers experiencing two service errors or account problems within one year were 35 percent more likely than the industry average to leave that financial institution. That attrition rate doubled after three errors in one year. The bottom six institutions ranked in the Organic Growth Index are among the largest financial institutions in the country: J.P. Morgan Chase, Citibank, U.S. Bank Corp., Bank One, Fleet and Sovereign Bank. The study found these firms have challenges with both customer and wallet momentum. Each of these institutions was among the poorest performers in at least two of the components according to customers surveyed. Many were particularly weak in customer momentum, a dimension along which most banking institutions in the study performed quite well. Achieving Organic Growth The study suggests a number of actions financial institutions should consider to achieve better organic growth: * Institutions with leading customer momentum scores have opportunities to cross-sell new products and services, but they will have to break through their tendency to think in silos of products and instead look at products th