Study: Retail Banks Struggle to Deliver on Customer Metrics

According to the new J.D. Power 2022 U.S. Retail Banking Satisfaction Study, digital transformation and rising inflation have created a new set of customer engagement challenges for the nation’s retail banks.
Group of people in a line at an ATM waiting to make a cash withdrawal
Inflation and digital transformation have caused U.S. retail banks to falter in customer metrics according to a new J.D. Power study. // Stock Photo

According to the new J.D. Power 2022 U.S. Retail Banking Satisfaction Study, digital transformation and rising inflation have created a new set of customer engagement challenges for the nation’s retail banks.

According to the study by the Troy-based consumer insights firm, most banks are missing the mark when it comes to making their customers feel supported as increasing numbers of U.S. consumers indicate an increase in their financial stress.

Moreover, banks have struggled to deliver on customer expectations for personalization as nearly half of customers have now moved to primarily digital-centric banking relationships.

“A customer’s definition of what support from their retail bank looks like is changing rapidly as we enter a new economic cycle and move further along the digital adoption curve,” says Jennifer White, senior consultant of banking intelligence at J.D. Power.

“It’s no longer predominately about being fast, efficient, or convenient. The preeminent performance metric with the biggest influence on customer satisfaction is ‘supporting customer during challenging times,’ and that means customers are expecting a personalized mix of financial advice, hands-on help with problem resolution, and guidance on how to grow their money.”

Overall customer satisfaction with retail banks rose 155 points on a 1,000-point scale when customers cite that their bank supports them during challenging economic times. Similarly, 63 percent of customers say they definitely would not switch banks and 78 percent say they definitely would reuse their bank when it delivers this support. However, despite its huge effect on customer satisfaction, only 44 percent of banks are delivering on this metric.

While banks perform particularly well on traditional customer engagement metrics such as people, digital channels, and overall trust, satisfaction scores are lowest for helping retail bank customers save time or money, which has become a key priority for them.

Although customers who pay bank fees (e.g., overdraft or low balance fees) are three times more likely to consider switching banks, only 61 percent either do not know or are unsure whether their bank has made any changes to their overdraft fee policy. Notably, many big banks have introduced fee relief plans this year.

When asked how they would like their bank to personalize their banking experience, 46 percent of customers say they want help in avoiding fees and 37 percent say they want to receive account alerts.

The study measured customer satisfaction on a 1,000-point scale with banks in 15 geographic regions. Michigan is included in the North Central region with Indiana, Kentucky, Ohio, and West Virginia:

City National Bank (W.V.) has the highest rating at 706, followed by Bank of America at 704 and Huntington at 701. Chase scored 688, the last bank to score above the regional average of 667. Fifth Third Bank scored 665, Woodforest National Bank scored 660, PNC scored 659, and Flagstar Bank scored 658. The bottom three ranked banks were Comerica Bank, First Merchants, and Citizens Bank, scoring 595, 640, and 651 respectively.

The U.S. Retail Banking Satisfaction Study, now in its 17th year, was redesigned for 2022. It measures satisfaction across seven factors (in order of importance): trust, people, account offerings, allowing customers to bank how and when they want, saving time and money, digital channels, and resolving problems or complaints.

The study is based on responses from 101,587 retail banking customers of the largest banks in the United States regarding their experiences with their retail bank. It was fielded from April 2021 through January 2022.

National banks are defined as banks with more than $300 billion in domestic deposits; regional banks are those with $65 billion-$299 billion in domestic deposits; and midsize banks are those with 50-100 branches nationally and at least 20 branches within a respective region.

For more information, click here.

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