TROY, Mich.–Retail bank customers in the U.S.–and by default, credit union members—are feeling stressed and are looking to their financial institution for help, according to a new survey from J.D. Power has found.
The same study found bank branch traffic has nearly rebounded to pre-COVID levels.
J.D. Power said its analysis shows that as deposit balances and financial health levels sink, personalized advice and guidance are needed now more than ever. Persistent inflation and an uneasy economy have “rattled” retail bank customers, the company added.
According to the J.D. Power 2023 U.S. Retail Banking Satisfaction Study, the percentage of customers with $10,000 or more in primary bank deposit balances has declined 16 percentage points in the past year, while the percentage of customers categorized as financially unhealthy1 has increased nine percentage points. This shift is causing more customers to reallocate their funds in the hunt for higher interest rates or better savings programs, upping the ante for banks to deliver personalized advice and guidance, J.D. Power said.
‘Tenuous Time’
“It’s an incredibly tenuous time for both bank customers and financial institutions, and the need for trust between these two parties has never been more pronounced,” Jennifer White, senior director of banking and payments intelligence at J.D. Power, said in a statement. “Although our study was conducted prior to the recent high-profile bank crisis, the difficult economic conditions that contributed to the Silicon Valley Bank and Signature Bank failures have been building for quite some time. For banks to attain high marks in satisfaction and build the enduring loyalty that comes with it, customers need to feel supported through tough economic times. They need to be able to conduct their business with ease and feel like their funds are safe and secure.”
‘Struggling’ Customers
According to J.D. Power, the following are some key findings of the 2023 study:
- Bank customers struggling but advice and guidance lacking. “Overall customer financial health has declined nine percentage points year over year and advice has been hard to come by, as just 21% say they received advice or guidance in the past year. However, banks that have effectively guided their customers have reaped the rewards. Customers who have received advice/guidance in the past 12 months are significantly more likely to have opened a new account with their primary bank, and the rate of new account openings grows even higher when the advice completely meets customer needs. Nearly half (47%) of those who received effective advice opened a new account.”
- Urgency grows on fees, fairness and fraud. “Since the 2022 study, more customers say they’ve experienced fees and fraud. The number of customers who were charged a fee in the past year has grown five percentage points, while reports of problems related to fraud have increased three percentage points among customers experiencing problems,” J.D. Power said. “Customers facing these issues were more likely to be under age 40, categorized as financially unhealthy and have less than $10,000 in deposits. Banks that demonstrate fairness relative to fees and fraud gain an advantage.
“When customers receive communications on how to avoid fees, overall satisfaction scores increase 166 points (on a 1,000-point scale) and trust scores are 172 points higher,” J. D. Power continued. “Additionally, alerts regarding suspicious account activity are the most common way that customers say their bank can show that they care about their customers’ financial well-being.”
The Findings
Among the other findings:
- Money on the move. The proportion of retail bank customers with more than $10,000 in deposit balances at their primary bank has declined to 28% from 44% a year ago, while the proportion with less than $1,000 in deposit balances has surged to 30% from 17% year over year. What’s more, 30% of primary bank customers have shifted, on average, 37% of their deposits to a secondary financial provider, according to J.D. Power
- Back to branches. J.D. Power said its research found overall branch usage has grown to just below pre-pandemic (2017-2019) levels, and branch visits are expected to continue at this pace. “Nearly three-fourths (72%) of customers this year say they plan to use their bank’s branches at the same rate in the coming year, and 38% of customers describe branches as essential. Of note, customers under age 40 are more likely to say they expect to see their branch visits increase in the next 12 months (21%) than are customers over age 40 (12%).”
Findings By Region
J.D. Power said the study measures customer satisfaction with retail banks in 15 geographic regions. Highest-ranking banks and scores, by region, are as follows:
* California: U.S. Bank (667) (for a third consecutive year)
* Florida: Chase (686)
* Illinois: Wintrust Community Bank (708) (for a second consecutive year
* Lower Midwest Region: BancFirst (697)
* Mid-Atlantic Region: Chase (697)
* New England Region: Bangor Savings Bank (723) (for a sixth consecutive year)
North Central Region: Huntington (696)
Northwest Region: Columbia Bank2 (688)
- New York Tri-State Region: Liberty Bank (718)
- Pennsylvania: Huntington (694)
- South Central Region: Bank of America (689) and Capital One (689) in a tie
- Southeast Region: Synovus Bank (702)
- Southwest Region: FirstBank (691) (for a third consecutive year)
- Texas: Frost (728) (for a 14th consecutive year)
- Upper Midwest: Chase (661) (for a third consecutive year)
Basis for Study
The 2023 study is based on responses from 101,400 retail bank customers of the largest banks in the United States regarding their experiences with their retail bank. It was fielded from January 2022 through January 2023, the company said.
visit https://www.jdpower.com/business/retail-banking-study-1
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