Customer Service

Digital-Only Customers Pose Major Challenge For Banks

Overall Satisfaction Historically Declines as Bank Customers Transition from Branches to Digital

Keith Griffin

May 1, 2020

Digital banking customer | Photo by Andrea Piacquadio from Pexels

A new J.D. Power survey shows retail banks face major customer satisfaction challenges as customers move more toward digital-only engagement. Those customers have the least loyalty to their financial institutions.

According to the J.D. Power 2020 U.S. Retail Banking Satisfaction Study, 52% of retail bank customers classified as branch dependent before the COVID-19 pandemic, and successfully transitioning them to digital—without compromising customer experience—will be critical in the weeks and months ahead.

In the Mid Atlantic region, which encompasses Delaware, Maryland, New Jersey, New York, Pennsylvania, Virginia, and Washington, D.C., S&T Bank, based in Indiana, Pennsylvania, had the highest ranking.

“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,” said Paul McAdam, senior director, 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.”

The report found the most satisfied retail banking customers use both branch and digital services to conduct their personal banking, while the least satisfied are those who have a digital-only relationship with their bank and do not use branches.

JD Power Banking Study 2020
Data published by J.D. Power
Following are some key findings of the 2020 study:
  • Pre-pandemic, branches still played major role: Prior to the COVID-19 pandemic, 52% of retail bank customers were classified as branch dependent, meaning they either used the branch exclusively (10% of customers) or used a combination of branch visits, online and mobile banking service (42% of customers) 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% of bank customers now do their banking in a digital-only manner and do not use branches.
  • Digital-only customers have lowest levels of satisfaction: 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.1
  • Big banks lead midsize and regional banks on digital engagement: The Big 62 banks currently have a jump on regional and midsize banks to build digital engagement. Prior to the pandemic, 49% of big bank customers had high levels of digital engagement, compared with 41% of regional bank customers and 36% of midsize bank customers.
  • P2P payment integration emerges as wild card for bank customer satisfaction: Satisfaction is significantly higher among customers who have linked their bank accounts to digital payment services (e.g., Zelle, Apple Pay, PayPal, Venmo) than among those who have not. Among P2P (person to person) payment providers, direct integration with Zelle generates the highest boost in bank customer satisfaction.

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