New Study Finds That While Overall Satisfaction Has Risen, Banks Are at Greater Risk of Losing Customers
— The landscape of retail banking continues to transform, and customer expectations are at an all-time high —
Boston, MA [October 25, 2017] – ath Power Consulting, a leading financial services research and strategy firm, today announces its release of the latest ath Power Ideal Banking Study™, a detailed assessment of the desires and behaviors of today’s retail banking consumers across the U.S. and Canada. Results found that credit unions and community banks continue to lead in overall customer satisfaction, however, the largest 4 U.S. banks (JP Morgan Chase, Bank of America, Citigroup, and Wells Fargo) showed the most improvement with an 18-point climb since 2010.
“New competitors, increased innovation, and higher customer expectations are forcing financial institutions to change with the times, or risk being left behind,” stated Frank Aloi, ath Power Founder and CEO. “Banks and credit unions must respond to consumer demand, and for some institutions, that means re-inventing the way they serve their client base. Both the number and type of branches are an area of focus.”
Study findings revealed that almost six-in-ten respondents (57%) find open-layout, café-like branches attractive, with 46% liking self-service devices at branches. Video tellers are an important component of branch strategies for some of the larger banks and are favored by 21% of respondents. Their popularity will likely grow over time as customers become more familiar with them, and newer and more capable models emerge.
Results also showed that 59% of Millennials express a preference for self-service devices (e.g. kiosks and tablets) in branches, while only 40% of Baby Boomers would welcome them. Even with the expanded and key role that self-service channels have in banking today, there remains a need for human interaction at times – particularly in matters requiring education or advice, or ones that are complex. 36% of this year’s survey respondents say that having access to employees who are knowledgeable about the bank’s products makes for an “ideal banking experience,” a 10-point increase from five years ago.
When asked which banking innovations are of interest to them, respondents largely chose capabilities that go beyond transactions and include the coordinated planning, management, and forecasting of their funds and money movement. More than three-in-ten cited interest in innovations that meet these criteria, such as wanting a coordinated digital banking platform (33%), their bank being a single-source of banking and payments apps (32%), or to help them plan or manage budgets (31%).
Millennials, in particular, would welcome help with budgeting and managing finances: 43% say so, compared to just 22% of Baby Boomers. Similarly, Millennials are three times as likely as Baby Boomers (19% vs. 6%) to want to be able to compare their spending and savings activity with those of their anonymous peers. Aloi noted that, “These findings reflect formidable challenges faced by Millennials compared to earlier generations, including student loan debt, limited job prospects, and low incomes.”
Not surprisingly, mobile banking continues to gain importance with consumers, particularly the younger generation, with 27% of Millennials citing it as the one banking feature they could not live without, while just 11% of Baby Boomers feel the same way.
“Millennials do not value – or are not happy with – the personal touch to the same degree as older generations and instead seek out automation and self-service,” stated Aloi. “This will likely favor larger institutions over time, given their heavy investments in digital banking and branch automation.”
Notably, 25% of respondents indicated a preference for their bank or credit union to be a single point of contact for all financial needs. This suggests that customers are open and receptive to their primary financial institution playing a greater and more central role across all their financial needs. However, in order to do so, banks and credit unions must evolve to serve them where, when, and how they wish to be served or else risk losing them, or at least some of their financial activities (especially those that are payments-related), to challenger banks, FinTechs, and others.
Overall, this year’s study suggests that the banking sector continues to have disgruntled customers: one-in-five (21%) customers say they may change primary financial institutions within the next year, a 4-point increase from our previous study. Customers of the largest 4 U.S. banks are the most likely (26%) to indicate an intent to leave their current primary bank while credit union members (13%) are the least likely to do so. The rapidly growing Millennial segment appears most at risk for attrition with 25% of them saying they are ‘somewhat’ or ‘extremely’ likely to switch primary institutions within the next year. Baby Boomers (19%) and Generation X’ers (22%) are less so inclined.
The top three reasons respondents cited for switching from their previous bank or credit union to their current institution are unchanged from the previous study, though poor customer service has risen to be the leading reason for a customer’s departure, and relocating took the second-place spot. Fees – the previous top reason for leaving – are becoming less of a concern and are now the third most cited reason, perhaps reflecting an improved economy.
So, what would it take to get a customer not planning to switch banks to make the move? Among those expecting to stay put, more than one-in-three (37%) indicated they could be enticed away by incentives, such as a rewards program, while almost as many (31%) might be sufficiently motivated by lower fees.
About the Study
Now in its seventh year, The ath Power Ideal Banking Study™ is one of the most highly regarded, in-depth assessments of the retail banking industry available today. Developed to better understand the wants, needs, and behaviors of today’s banking consumers, and fielded in the first half of 2017, the study is based on survey responses from 2,700 customers of 660 U.S. and Canadian banks and credit unions. Through the survey evaluation, respondents assessed their primary financial institution in areas such as customer service, product offerings, problem resolution, likelihood to recommend, and likelihood to switch. They also provided insight into their most desired banking features, preferred ways to bank, interest in newer technologies, and behaviors across channels. The report reveals which elements make up the “ideal banking experience” – and where financial institutions may be missing the mark. Also included is an analysis of the changing branch environments, types of branch layouts desired, and satisfaction with various bank performance factors. The study offers actionable insight into what needs to be done by financial institutions to deliver the customer experiences that will ultimately increase acquisition, improve retention, and drive revenue.
To learn more or order the report, visit https://www.athpower.com/the-ath-power-ideal-banking-study/.
About ath Power Consulting
ath Power is the premier provider of customer experience solutions for the financial services industry, offering competitive intelligence, survey and shop research, compliance auditing, market analyses, employee training, and strategic consulting. Since 1997, we have helped improve customer retention, build brand loyalty, ensure compliance, and increase profitability for financial institutions across North America. To learn more, visit https://www.athpower.com.
ath Power Consulting