As the COVID-19 pandemic places constraints on in-person retail banking and forces customers to increase reliance on digital service channels, banks must face a test of customer satisfaction, according to a report by Troy-based J.D. Power.
The study shows that retail banking customers who use both branch and digital services to conduct their personal banking are the most satisfied, while those who have a digital only relationship with their banks are the least satisfied.
According to the J.D. Power 2020 U.S. Retail Banking Satisfaction Study, released today, transitioning 52 percent of retail bank customers classified as branch dependent before the COVID-19 pandemic to digital without compromising customer experience will be critical in the weeks and months ahead.
“With fewer customers visiting branches, it will be important for retail banks to replace the in-person service they would have provided with personalized services delivered instead through digital channels,” says Paul McAdam, senior director of banking intelligence at J.D. Power. “Given the technology available to banks, customer pain points with digital should be easy to address. Let’s keep in mind that digital retail banking was introduced 25 years ago. Executing basic user-friendly functionality, providing a full range of services, and offering easy ways to pay and move money are areas where banks could improve their digital offerings.”
Before the pandemic, branches still played a major role, the study found, with 52 percent of retail bank customers classified as branch dependent, meaning they either used the branch exclusively (10 percent) or used a combination of branch visits and online banking service (42 percent) during the past three months. Branch-dependent customers visit a branch an average of 1.5 times per month. Following 25 years of bank investment in providing and upgrading digital offerings and customers’ increased adoption of them, 30 percent of bank customers now do their banking in a digital-only manner.
Overall customer satisfaction with retail banks tends to decline as customers transition away from the branch and to digital-only banking relationships. The overall satisfaction score among branch-dependent bank customers is 824 on a 1,000-point scale, which is 23 points higher than the score among digital-only customers. That satisfaction gap is widest (31 points) among members of Generation Y.
Big banks have a jump on regional and midsize banks to build digital engagement. Prior to the pandemic, 49 percent of big bank customers had high levels of digital engagement, compared with 41 percent of regional bank customers and 36 percent of midsize bank customers.
Satisfaction is significantly higher among customers who have linked their bank accounts to digital payment services such as Zelle, Apple Pay, PayPal, and Venmo than among those who have not. Among person to person payment providers, direct integration with Zelle generates the highest boost in bank customer satisfaction.
The study measured customer satisfaction with banks in 11 geographic regions. Highest-ranking banks and scores, by region, are as follows:
- California region: Chase (825)
- Florida region: Chase (851)
- Mid-Atlantic region: S&T Bank (871)
- Midwest region: First National Bank of Omaha (847)
- New England region: Bangor Savings Bank (863)
- North Central region: City National Bank (WV) (857)
- Northwest region: Columbia Bank (837)
- South Central region: Arvest Bank (863)
- Southeast region: United Community Bank (862)
- Southwest region: Arvest Bank (851)
- Texas region: Frost Bank (863)
Rank charts for each region are available here.
The U.S. Retail Banking Satisfaction Study, now in its 15th year, measures satisfaction in six factors: account opening, communication and advice, channel activities, convenience, problem resolution, and products and fees. Channel activities include seven subfactors: ATM, assisted online, branch, call center, interactive voice response, mobile, and website.
The study is based on responses from 91,950 retail banking customers of 182 of the largest banks in the U.S. regarding their experiences with their retail banks. It was fielded from April 2019-February 2020. Big banks are defined as those with more than $250 billion in domestic deposits, regional banks are those with $55 billion-$250 billion in domestic deposits, and midsize banks are those with less than $55 billion in domestic deposits.
J.D. Power is a global leader in consumer insights, advisory services, and data and analytics. It was established in 1968 and has offices serving North America, Asia Pacific, and Europe.
More information on the study is available here.