U.S. retail banks are doing their customers — and themselves — a disservice by failing to meet their growing expectations at a time when Americans are facing rising household costs, a possible recession and record levels of debt, J.D. Power reported Thursday.
Fifty-nine percent of retail bank customers in a new study said they expect their financial institutions to help them improve their financial health, but few national and regional banks are providing the guidance they seek, as evidenced by a drop of 30 points to 601 (on a 1,000-point scale) in overall customer satisfaction from a year ago.
“The past few years have been tough on consumers in general, and many of the financial pressures they face may not subside all that quickly,” Jennifer White, senior director for banking and payments intelligence at J.D. Power, said in a statement.
“The data make it crystal clear: retail bank customers want guidance, but many aren’t receiving it. The tools banks have at their disposal aren’t always being used or, when they are, they are not used effectively.”
White said neither banks nor their customers benefit from this dynamic. “If banks don’t begin to make more progress in making advice content resonate, they could be facing significant attrition risk.”
J.D. Power fielded its 2022 U.S. Retail Banking Advice Satisfaction Study in January and February, gathering responses from 5,177 retail bank customers in the U.S. who had received any advice or guidance from their primary bank regarding relevant products and services or other financial needs in the past 12 months.
The study showed that the downward movement in overall satisfaction with the advice and guidance provided by retail banks can be seen across all attributes of satisfaction. However, the biggest declines were in retail bank customer perceptions of the frequency of advice or guidance about financial products and/or financial needs and the quality of that advice or guidance.
J.D. Power said this occurs despite respondents’ view — evident across different age groups and personal financial health categories — that financial firms should be helping them improve their financial situation.
Although many banks may be trying to meet their customers’ advice needs, the specific advice content respondents recalled declined year over year, according to the study.
Sixty-three percent of customers said they had received advice two or more times in categories including financial planning; investment and retirement; savings, tips and information; or banking services. This was down from 70% a year ago.
Advice related to savings, tips and information fell the most compared with 2021. The only category of advice that did not experience a decline was on borrowing and housing.
J.D. Power used respondent-cited data on spending/savings ratio, creditworthiness and safety-net items such as insurance coverage to create a measure of customer financial health, placing customers on a continuum from healthy to vulnerable.
Just 47% of bank consumers who said they have received advice fell into the financially healthy category. Among the remaining customers, 28% were categorized as vulnerable, 16% overextended and 9% stressed.
The study found that when customers could recall two or more instances of advice they had received, their overall satisfaction increased 52 points.
But advice and guidance must be personalized to the specific customer, delivered to the right person at the right time, according to the research firm. When this happens, satisfaction is even higher.
Customers in the study who received personalized advice just once had higher satisfaction (697) than those who received advice on five or more topics that was not personalized (583).
See the gallery for the retail banks that ranked above and below the industry average for overall customer satisfaction with advice.