Is Bank of America Finally Listening to Its Customers?

Bank of America misses the mark in the J.D. Customer Satisfaction study. But there is a bright spot for the big bank.

May 2, 2014 at 8:00AM

Bank of America (NYSE:BAC) customer service trailed the average across the U.S. But a deeper dive shows there's good news to be had.

The big loser
The latest capture of customer satisfaction from J.D. Power was released this week and, despite all the turmoil surrounding banks, satisfaction is actually at an all-time high. 

Only Bank of America and Wells Fargo (NYSE:WFC) are categorized in all 11 regions in which J.D. Power collects information. Bank of America trails the average in all areas, but Wells Fargo isn't far behind, trailing in seven regions:

Source: J.D. Power and Assocates 

But it must be noted the average gap between Bank of America and all the other banks stands at 17 points, versus just 1 for Wells Fargo.

With all of this in mind, it's easy to think this is just one more piece of bad news piled on to Bank of America. But there is one thing both investors and individuals need to know.


Things are looking up for Bank of America.

Pace of improvement
The average customer service rating of all banks improved in each of the 11 areas. But since we knew overall satisfaction reached a record high, this should come as no surprise.

What may come as a surprise is that Bank of America saw its customer satisfaction, also rise in all eleven areas.  

And not only that, but the improvement recognized by Bank of America actually outpaced the banking average. It's total scores in the 11 areas rose by 287 points, which was 15% more than the total growth recognized by the average bank. 

What this means to individuals and investors
This can be taken two ways. Bank of America started at a lower point, so they had more room to move up. Or, it's evidence that the bank is not only committed to improving itself, but is succeeding as well.

I've chosen to take the latter.

Bank of America itself is a turnaround story. Whether it was the disastrous acquisition of Countrywide or the consumer rage over the $5 fee fiasco, Bank of America has seen some of the lowest lows of any bank in the country.

While progress to recover from these troubles has been neither fast nor easy -- five years after the market collapse it's suspected to shell out more than $20 billion in legal settlements this year alone -- it's still making measurable progress.


Source: Company Investor Relations.

In 2013, the company earned nearly as much as it did in the five years from 2008 to 2012 combined. While income will take a hit in 2014 as a result of the settlements, my colleague John Maxfield noted, "Bank of America is indeed nearing the finish line when it comes to legal liability dating back to the financial crisis."

Bank of America has a long way to go until all the marks of the financial crisis are truly behind it. But improvements in customer satisfaction and the bottom line show that it's certainly making progress.

Warren Buffett recently said his $5 billion investment in Bank of America was already worth nearly $11 billion. But he was content holding until 2021 -- and perhaps beyond.

Buffett's investment in Bank of America is "one we value highly," and you should too.

Big banking's little $20.8 trillion secret
While Bank of America is definitely improving, it is undoubtedly worried about one of its competitors. That's because there's a brand-new company that's revolutionizing banking, and is poised to kill the hated traditional brick-and-mortar banks. That's bad for them, but great for investors. And amazingly, despite its rapid growth, this company is still flying under the radar of Wall Street. To learn about about this company, click here to access our new special free report.

Patrick Morris owns shares of Bank of America. The Motley Fool recommends Bank of America and Wells Fargo. The Motley Fool owns shares of Bank of America and Wells Fargo and has the following options: short June 2014 $50 calls on Wells Fargo and short June 2014 $48 puts on Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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