Digital offerings and more engaged personal interaction are helping American retail banks restore consumer confidence, according to new study by JD Power released this week. Satisfaction with big banks has risen, driven by more engaged personal interactions and stronger connections with growth segments of the population, while satisfaction with midsize banks has dropped.
“We clearly see that the customer satisfaction leaders in retail banking excel by hitting the sweet spot of providing a great digital experience backed by personal service,” said Paul McAdam, senior director of banking services at J.D. Power.
This report comes months after an IBM report found serious gaps between how retail banking executives believe they are doing, and how their customers really feel. Among retail banking executives IBM surveyed, 62 percent thought they were delivering an excellent customer service but only 35 percent of retail customers agreed — a 27 percent gap.
But the JD Power study confirms more engaged personal interaction holds the key to gaining customer satisfaction. “Better in-person interactions with Millennials drive historic performance Improvement among nation’s largest retail banks,” noted the study.
Millennials represent the biggest growth potential for retail banks, but also pose much higher risk of attrition, says JD Power, adding that US big banks have been most successful at acquiring and satisfying millennials.
Millennials switch banks more quickly than others if they find the customer service not satisfying. A study by Finextra Research similarly found as many as 68 percent of corporation willing to switch banks for better customer service.
This is a wake-up call for banks faced with increasing competition. Banks need to recognize early on that the value is shifting away from banking services to the deep customer relationships.
“They can pretend it isn’t happening and be cannibalized by their competitors; they can try to compete in low-margin services, acting as a processor for various organizations; or they can recognize the incredible value in their customer relationships and build a powerful ecosystem around them,” warns IBM report.
IBM has cited the success of Canadian bank, Tangerine, specializes in technology-enabled customer experiences. “Recently they rolled out a new app that allows customers to report feedback on Tangerine apps simply by shaking their phone. The speed at which the new app was made available was cut by more than 90 percent, and it delivered thousands of pieces of valuable customer feedback in a matter of days.”
The IBM study – based on the survey of 1,060 banking executives in 38 countries and 1,600 banking customers in the United States, Germany, United Kingdom, Singapore and China – suggests banks that they try to gain strong relationship with customers just the way traditional banks have with customers.