NEW YORK (TheStreet) -- Banks savings rates are at historic lows.
Banking consumers are still battling high overdraft fees and new fees linked to checking accounts, despite government intervention against high banking costs.
In addition, banks have reined in lending in the years since the Great Recession, making credit harder to get for consumers.
Yet despite all that, customer satisfaction with banks is at "an all time high," according to the J.D. Power 2014 U.S. Retail Banking Satisfaction Study.
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Banks, especially bigger banks and credit unions, are doing much better jobs solving customer problems and educating customers on high fees and how to avoid them, J.D. Power says, although midsized banks aren't doing as well as either their larger and smaller competitors, especially with key demographics.
"Midsize banks are falling behind in meeting the needs of the fastest-growing demographic groups, millennials and minorities, especially in online, mobile and problem resolution," says Jim Miller, director of banking services at J.D. Power. "If midsize banks don't change their focus to adjust to demographic shifts, they are extremely vulnerable and risk losing market share to competitors and becoming irrelevant."
J.D. Powers' ranking system pegs customer satisfaction at 785 out of a possible 1,000 points, up from 763 last year. Study analysts say consumer sentiment is up because banking customers are seeing fewer problems, and when they do have a screw-up with their bank the problem is corrected in a reasonable amount of time.
The study reports 16% of bank customers having problems with their financial institutions, compared with 24% in 2010.
"Fee satisfaction" is also up to the highest levels recorded by J.D. Power since 2010.
Somewhat surprisingly, it's the wealthiest customers who are least satisfied with banks.
J.D. power says more-affluent consumers aren't getting the "personal experience" they require and expect from their banks, which don't seem inclined to ramp up efforts to meet those demands.
"It's remarkable that banks are failing to satisfy affluent customers, especially with deposits and liquidity so important to the life of a financial institution," Miller says. "As boomers age, the country is poised for a huge transfer of wealth in upcoming years. As this occurs, those banks that have satisfied the affluent segment will be more competitively positioned to prosper."
Consumers seem to be taking more responsibility about fees and taking more time to shop for the right bank.
"Even with record high satisfaction, there are some banks that fall far short in meeting customer needs. It is easy for banks to become complacent," Miller says. "To stay at the top of their game, banks should focus on those customers who are not satisfied. And consumers should keep in mind they have the opportunity to shop banks to find the right combination of services, products and fees to meet their needs."
Bank shouldn't become complacent after seeing the J.D Power study. With increased competition from online services such as PayPal, big box retailers such as Wal-Mart and new lending services from the crowdfunding industry, banks are vulnerable these days -- and they know it.
Perhaps that's why banks are raising their game, and providing a better experience for their customers -- because they can't afford not to.