As customers switch to apps, banks struggle to maintain customer service edge

File photo Nearly half of bank customers nationwide now have a “digital-centric” relationship with their bank, a new study by J.D. Power shows. But with rising inflation and a rapidly changing economy, many banking customers are seeing an increase in financial stress.

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By Peter Van Allen

Many bank customers made the shift to digital banking during the pandemic, adopting apps at a record pace.

Nearly half of bank customers nationwide now have a “digital-centric” relationship with their bank, a new study by J.D. Power shows.

But with rising inflation and a rapidly changing economy, many banking customers are seeing an increase in financial stress, leaving banks scrambling for ways to deliver a “meaningful customer experience,” according to the “2022 U.S. Retail Banking Satisfaction Study,” which the market research firm released Monday.

“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,” said Jennifer White, senior consultant of banking intelligence at J.D. Power.

“It’s no longer predominately about being fast, efficient or convenient," she added. "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.”

J.D. Power said banks face the “twin forces” of digital transformation and rising inflation. The study says banks have struggled to deliver on customer expectations for personalization as nearly half of customers have now moved to primarily digital-centric banking relationships.

Other key findings:

Customers like it when a bank supports them “during challenging economic times,” and customers in turn are less likely to switch banks in times like this. Despite that, only 44% of banks are delivering on that support right now.
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% 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% of customers say they want help in avoiding fees and 37% say they want to receive account alerts.

Bangor Savings at top of New England banks

The study measured customer satisfaction with banks in 15 geographic regions.

In New England, Maine's largest bank, Bangor Savings Bank, tied for the highest score, 722 (out of 1,000), along with Rockland Trust in Massachusetts.

A Texas bank, Frost, had the highest customer satisfaction score, earning a score of 755.

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.