Posted by Bethany Frank on 10 Mar 2016
Customer satisfaction is subjective and dependent upon any number of variables, from design to pricing to brand sentiment and beyond. In the digital age, however, customer satisfaction in banking is becoming increasingly tied to user experience and the breadth of digital services offered by a financial institution. Consumers are flocking to financial service providers that best meet their needs in the areas of convenience, speed, and security.
Smaller banks historically dominated customer satisfaction ratings, consistently beating out large legacy financial institutions due to their ability to offer customers a more personalized experience, but the tide is turning. Larger banks have managed to steadily and somewhat silently improve customer satisfaction rates since 2012, and new research from J.D. Power shows consumers now prefer large banks due to their superior digital offerings. Smaller banks are finding it particularly difficult to deal with this “digital disruption”. Unable to address complicated infrastructure challenges and rising consumer demands, they risk losing customers to banks that are actively investing in modernization efforts.
J.D Power’s 2016 U.S. Retail Banking Customer Satisfaction Study illustrates the rapid rise of digital natives in every demographic, as well as the increasing importance of appeasing millennials. The digital services offered by large banks gained them high marks among these digital natives, millennials, and the newly affluent, easily elevating them above smaller banks with less comprehensive digital options. In order to remain competitive in the financial services market, banks will have to adjust to the demands of changing demographics.
Financial institutions are also facing unprecedented pressure from the technology sector as both established tech giants and more nimble, focused start-ups seek to chip away at banking profit margins. Many consumers are open to switching to third-party niche financial service providers that provide easy and secure digital experiences, creating plenty of room in the market for new players. Research from global design firm Beyond shows consumers are as interested in financial products from tech brands as they are from banks. The same survey revealed that consumers are even more interested in online-only banking experiences, with 79% of respondents interested in online-only payments and money transfers, and 77% interested in online-only checking services.
These modern consumer expectations are largely a byproduct of the tech boom itself. With companies like Apple, Google, and Facebook consistently going above and beyond consumer expectations to deliver cutting edge products and user experiences, consumers have come to expect the same from other service providers.
Despite the challenges, banks still have a significant strategic advantage over non-bank players. The digitization of modern society is somewhat of a double-edged sword, as consumers both desire more electronic connectivity and fear the proliferation of technology. A majority of consumers still have more trust in their banks’ financial applications than those offered by third-party providers. According to a survey conducted by ING, 84% of mobile device users trust their bank’s mobile app, while 42% of respondents do not sufficiently trust apps that are not from banks. This leaves the playing field wide open for banks to regain control of the financial services market if they give consumers what they want.
It’s difficult for consumers to accept slow processing speeds and less-than-instant service from banks in an age where so much can be accomplished at the touch of a button. People want simple yet powerful online services that from financial service providers they can trust. By placing emphasis on user experience and stringent security standards, banks can improve customer satisfaction, increase customer retention, and remain viable forces in the financial service industry even as markets shift and evolve.