Customer satisfaction rises again, but at a slower pace, according to the latest National Customer Satisfaction Index (NCSI UK) results. The NCSI increases for the fourth straight quarter, up just 0.1% to 73.8 on the 0-100 Index scale. Customer satisfaction improves for banks, credit card providers and mortgage lenders, but declines for home and motor insurance companies.

“Because of major changes in the global economy, mostly due to new information technology, the balance of power between buyer and seller is shifting in favor of the buyer,” said Professor Claes Fornell, founder of the ACSI, NCSI, and author of The Satisfied Customer. “A firm’s financial future now rests greatly on the health of its customer relationships. In the aggregate, it is the same with respect to the health of a country’s economy. Satisfied customers create demand, which in turn, generates employment and economic growth. The latest NCSI results suggest that the UK economy is recovering, but similar to the case in the US – at a very slow pace.”

Retail Banking:

Customer satisfaction with retail banking advances 1.4% to 71. HSBC (including First Direct division) improves 11% to 78, strengthening its lead over other large banks. Both Barclays and Lloyds TSB increase customer satisfaction to tie at 70, but Barclays has a slight lead in value for money. Santander surges 8% to meet RBS Group (-1%) at 68. HBOS is down 3% to 66.

Mortgage Lenders:

Despite a 1.4% improvement to 70, mortgage lending continues to have lower customer satisfaction than any other financial service. Low interest rates and a shrinking customer base have helped – the cost of a tracker loan fell to an all-time low in October with mortgage lending activity at its lowest level in a decade. Nationwide has the highest customer satisfaction at 76 (up 3%). Lloyds TSB gains 7% to 74 and Barclays remains above the industry average at 72. HBOS is up 6% to 70 and Santander falls to 67.

Credit Card Providers:

Customer satisfaction with credit cards is up 2.8% to 74, a record level for the industry. The number of credit cards issued continues to decline as households consolidate accounts, but customers seem less likely to switch between providers as loyalty to credit card providers is stronger than in any other financial service category. Smaller credit card providers and retailers continue to have by far the highest customer satisfaction, up 3% to an NCSI score of 78. Large banks score much lower. HSBC slips 1% to 72 and is now tied with Lloyds TSB, which gains 4%. RBS (+4%) and Barclays (+3%) follow closely at 71, while HBOS remains unchanged at 70.

Home and Motor Insurance:

Customer satisfaction with home and motor insurance falls 2.6% to 75, but remains the financial service with the highest customer satisfaction. The decline is due in part to higher premiums. Only Aviva improves customer satisfaction this year. Churchill still leads the industry, but is down 4% to 76, tying the average of smaller home and motor insurance carriers (also down 1% to 76). Direct Line (-1%) and RSA (unchanged) both score 75, followed by Aviva (up 1% to 74). Zurich Financial falls 6% to last place at 73.

The National Customer Satisfaction Index, which applies the technology of the American Customer Satisfaction Index (ACSI), demonstrates a strong relationship to economic growth. Just as the NCSI showed a significant upswing in satisfaction followed by a smaller gain over the past two quarters, GDP has followed a similar pattern of growth, increasing 0.8% in the third quarter after a 1.2% growth during the previous quarter.