Customer satisfaction falls at big banks amid staffing challenges

Capital One Financial topped the nation’s largest banks in customer satisfaction this year, according to a new study that also found rising consumer discontent with the industry as a whole.

The McLean, Virginia, company earned a score of 692, compared with the industry average of 652, in J.D. Power’s national banking satisfaction survey. The authors attributed Capital One’s strong performance largely to strong digital offerings and affordable, low-fee deposit products. Capital One also topped the list last year.

Consumer financial health has steadily fallen since May, according to monthly field surveys that J.D. Power has conducted since the onset of the COVID-19 pandemic, said Paul McAdam, the company’s senior director of banking services. The decline has been driven largely by consumers’ concerns about adequate savings and creditworthiness, he said.

“What that means is that banks, like Capital One, that have value propositions around fairness and helping customers avoid fees, are winning,” McAdam said. “Consumers are more sensitive to fees, they’re incurring fees more often with declining financial health. The feeling that ‘the account is doing what it needs to do and I'm satisfied with it’ is declining, and we see that in the results.”

Across the banking industry, customer satisfaction declines were largest among consumers under 40, who tend to be less financially secure, and among customers who rely heavily on bank branches, J.D. Power found. Industrywide scores also declined for certain metrics like problem resolution. That deterioration was likely driven by labor market shortages, which resulted in increased wait times at call centers, McAdam said.

“We are seeing across the industry pressure on the call center,” McAdam said. “Websites and mobile apps don’t allow customers to do everything they need to do. They still need to pick up the phone, and wait times with problem resolution have an impact.”

Capital One has long had a strategy of aggressively cutting branches, opening Capital One cafes in markets where it does not have branches and relying heavily on digital channels to gather new deposits. The $425 billion-asset company had 325 branches as of June 30, down from 476 branches two years earlier, according to Federal Deposit Insurance Corp. data.

In J.D. Power’s 2019 customer satisfaction study, TD Bank finished first, apparently due in large part to its extensive branch network and the fact that its branches tended to stay open later than those of competitors. But as digital banking became more important during the pandemic, Capital One moved into the top spot last year.

Capital One recently announced that it would eliminate overdraft fees, making it the biggest bank to do so. Detroit-based Ally Financial said earlier in the year that it would stop charging overdraft fees, and a number of other large and midsize banks have taken steps to make it easier for customers to avoid the charges.

While the specter of regulatory intervention likely played a role in those banks’ decisions, the industry is also contending with competition from fintech firms that promise no overdraft fees. J.D. Power’s latest study suggests that reduced fees could become an even more critical differentiator for banks in the future, particularly among younger and mass-market consumers.

“We’ll see how the rest of the industry reacts, but we think this situation regarding overdraft fees is going to look pretty different a year from now, and that there will be other large banks that will make these moves as well,” McAdam said.

For the customer satisfaction study, now in its fifth year, J.D. Power surveyed 8,015 retail banking customers between August and October. The study, which used a 1,000-point scale, looked at banks with domestic deposits exceeding $200 billion.

PNC Financial Services Group finished second in the study, followed by TD Bank, JPMorgan Chase and U.S. Bancorp, all of which scored better than the industry average. The firms that scored below average were Citigroup, Bank of America, Truist Financial and Wells Fargo, which finished last among the big banks included in the study.

However, Citibank and Wells Fargo recorded the largest year-over-year increases in customer satisfaction scores. Citibank’s score increased by 17 points as a result of higher satisfaction with people and problem resolution, according to J.D. Power. Wells Fargo’s score rose by 16 points, driven by improved trust in the brand and higher satisfaction with problem resolution.