Source: Myfuture.com via Flickr.

Let's face it, consumers probably aren't thrilled with their bank, but consumer sentiment on the whole for the banking sector is improving.

According to the May 2014 release from J.D. Power regarding U.S. Retail Banking Satisfaction, overall satisfaction among big banks grew 23 points year-over-year to 782 on a scale of 1 to 1,000. J.D. Power's findings suggest that consumers are experiencing fewer problems, and when they do occur they're being resolved expediently. In addition, a rebounding U.S. economy is helping consumers feel more comfortable about their financial situation, also boosting their perception toward big banks.

But, for all the inroads that banks have made with consumers since the Great Recession, there are still a multitude of other areas where there's room for improvement. A rise in banking fees and difficulty in obtaining loans are just two of many challenges that consumers currently face, and which could encourage them to take their business elsewhere. Therefore, any bank that can inspire loyalty among consumers could wind up having a profitability edge over its peers.

How brand loyalty plays a critical role in banking
Of course, measuring consumers' brand loyalty to a bank isn't as cut-and-dried as it sounds. For that we turn to Brand Keys and its 19th annual Customer Loyalty Engagement Index. This annual survey interviewed more than 36,000 people to get a better understanding of how consumers view particular brands, how those brands interact with consumers, and ultimately how consumers view a brand versus its peers. The results of Brand Keys' 2015 CLEI could offer clues as to which bank or banks have the best chance of driving long-term growth.

On the surface, brand loyalty may not appear to be an important factor for big banks, but it's actually critical for growing their deposit and loan base, which tends to be the bread and butter of how they generate income.

Source: Wells Fargo, Facebook.

Loyal customers serve two key purposes for banks. First, they can spread free word-of-mouth advertising that can draw in new customers. To summarize an old saying: One happy person will tell another person about their experience, but one dissatisfied customer will tell 10 times as many people about their experience. In other words, making a customer feel special and sympathizing with their financial service needs and situation can drive a lot of brand loyalty and word-of-mouth advertising for banks.

Secondly, loyal customers tend to become high margin customers over time. Whether it's as simple as being too lazy to change banks or having actually forged an emotional connection to a specific brand, loyal customers are more likely to open multiple types of financial accounts if they're happy with their bank. This means that instead of just maintaining a checking account, a satisfied consumer might be willing to take out a mortgage, open a credit account and/or finance a line of credit, or even open a brokerage account. These financial services offer significant margin benefits for banks compared to a customer just maintaining a checking account.

Now that you have a better idea of why brand loyalty is so critical for the banking industry, let's take a closer look at Brand Keys' rankings to determine which banking chain topped the list in 2015.

A not-so-surprising loser
In total, Brand Keys ranked six large banks in the United States. Why only six? Probably because these were the six that registered enough times during its survey for Brand Keys to reasonably rank them.

One bank that disappointingly didn't disappoint was Bank of America (BAC 0.01%) which ranked fifth, ahead of only PNC Financial (PNC -0.14%).

Source: Bank of America, Facebook.

One of the biggest surprises to me was that Bank of America didn't rank last. Since the recession it's made a series of miscues that easily could have alienated its customers and even shareholders. In terms of legal settlements with the U.S. Justice Department relating the housing bubble Bank of America leads the pack – and that's not a good thing. Late last year The Huffington Post reported that of the $128 billion paid from banks to the Justice Department, Bank of America accounts for $61.2 billion of that total. These settlements have severely weighed down Bank of America's profits, hurting the company's share price, and they've given consumers a tangible reason to wonder whether Bank of America is operating in their best interests.

Not to mention, for a short time in 2011 Bank of America tinkered with the idea of charging a $5 monthly fee to its debit card users. After immediate public backlash over the decision and a small exodus of checking account holders, Bank of America reversed its decision. However, the damage was already done.

A surprising underperformer
Whereas seeing Bank of America toward the bottom of the brand loyalty list should be no surprise, finding Wells Fargo (WFC -0.39%) middling at No. 4, below ATB Financial at No. 3, shocked me.

The probable reason for Wells Fargo occupying banking brand purgatory could have to do with its minimal advertising budget compared to the rest of its peers. In 2011-2012, for example Bank of America and JPMorgan Chase (JPM 0.15%) spent $1.7 billion and $2.35 billion, respectively, on advertising. Out of the 36 companies which spent a minimum of $1 billion on advertising, Bank of America ranked 17th-highest, and JPMorgan Chase sixth-highest. Wells Fargo simply doesn't compete on impressions and instead relies on a relatively clean PR history that's mostly free of legal settlements to drive customer generation.

The brand loyalty leader among banks
Instead of Bank of America, Wells Fargo, and even Citigroup's (C -0.25%) Citibank which ranked No. 2, JPMorgan's Chase ranked as the banking brand loyalty leader for the fourth year in a row.


Source: Chase, Facebook.

"What's JPMorgan Chase doing that other banks aren't?" you ask? I'd start by suggesting that it's done a good job of utilizing social media and technology to market itself to millennials and small businesses. According to website AgencyCreative.com, Chase leads the banking industry with nearly 3 million Facebook likes and uses various social media platforms such as Facebook and Twitter to suggest financial products to small businesses and millennials. 

Source: Chase, Facebook.

Focusing even more on the millennial (and working toward reducing its long-term costs) JPMorgan Chase also recently announced the intended closing of 300 branches, or 5% of its total branches over the next two years. The move is being undertaken because its business dynamics are changing, and the number of deposits completed with a teller decreased to 42% in 2014 from 90% in 2007. The option to deposit money into an ATM or even take a photo of a check and have it deposited via a mobile device serve to improve consumer convenience and actually are a much more efficient option for JPMorgan Chase. Based on data from JPMorgan Chase, a teller deposit costs the bank $0.65, whereas a mobile deposit runs just $0.03.

But, just because JPMorgan Chase is focused on millennials doesn't mean it's forgotten about its bread-and-butter affluent client. Until as recently as 2011, JPMorgan Chase was a veritable non-player in retail wealth management. However, an increased focus on its private client wealth management services have opened the door to affluent customers and given Chase a lifeline of customers that are relatively unaffected by fluctuations in the U.S. economy.

Altogether, these factors have allowed Chase the ability to grow its deposits and loans, reduce its noninterest expenses, boost its asset management revenue, and maintain one of the healthiest dividends among money center banks with a current yield of 2.6%. I'd personally call it a pretty safe investment for investors going forward.