Least satisfied banking customers? Digital-only users

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Bankers love to boast about how many customers have adopted their mobile apps and online platforms. But they may want to tone down their enthusiasm, at least until they fix shortcomings on the customer service side.

Customers who use only smartphone apps or online channels are the least satisfied with their banks, according to a new J.D. Power study. Their complaints center around poor communication and advice, as well as dissatisfaction with online product offerings, fees and opening new accounts.

The most satisfied customers are those who frequently use online or mobile banking, but still visit branches two or three times a month, J.D. Power said in its 2018 U.S. Retail Banking Satisfaction Study released Thursday.

J.D. Power’s findings suggest that banks’ infatuation with how digital banking can cut costs has blinded them to problems with digital banking’s quality of product delivery and made them less focused on the importance of the branch experience, said Paul McAdam, senior director of the firm’s banking practice.

“Even if customers don’t go into a branch that frequently, there’s something about adding that personal element to it,” McAdam said.

J.D. Power only surveyed customers of banks that have physical branches and did not include digital-only banks such as Ally Financial and USAA. It covered banks across the asset spectrum, ranging from JPMorgan Chase and Wells Fargo to the $4 billion-asset Bangor Savings Bank in Maine.

To be certain, digital banking has provided numerous benefits to banks. The biggest one are winning the war to gather deposits, at least in part due to higher levels of investment in technology. And consumers’ shift to digital channels banking has allowed banks to reduce expenses by trimming staff and closing branches.

“The digital movement of money is half the money moved by customers today,” Bank of America Chairman and CEO Brian Moynihan said during an April 16 conference call. “It’s allowed us over the last 10 years to go from 6,100 branches to 4,400.”

Still, it’s when customers combine use of both digital channels and physical branches that they’re the most satisfied, according to the J.D. Power study. That’s likely because they are customers of banks that have figured out how to effectively integrate the branch experience with the digital banking channel, McAdam said.

And the finding reinforces the idea that brick-and-mortar branches still have a role to play even as branch traffic declines, he said.

“It seems that the customers who aren’t just digital-centric feel a lot better about the products and fees and their engagement with the bank,” McAdam said.

J.D. Power changed some of the factors that it used to compile this year’s study. Each bank’s score reflects a bank’s performance in six categories, including customer communications, product offerings, fees and service provided via ATMs, branches and mobile and digital channels.

In this year’s study, U.S. Bank was the top-ranked institution in the California with a score of 824 on a 1,000-point basis. BBVA Compass topped last year’s rankings in the Golden State but was not included in this year’s results due to a change in methodology.

In Florida, TD Bank was tops for the third time in the last four years, with a score of 844. The $32 billion-asset Frost Bank, a unit of Cullen/Frost Bankers, led the Texas region for ninth consecutive year with a score of 873.

In the Mid-Atlantic region, the $9 billion-asset Northwest Bank in Warren, Pa., had the highest score at 840. The $20 billion-asset First National Bank of Omaha placed first in the Midwest region with an 845 score.

Bangor Savings led the New England region with an 862 score. In the North Central region, the $4 billion-asset City National Bank of West Virginia in Charleston placed first with a score of 854.

In the Northwest region, the $10 billion-asset Banner Bank in Walla Walla, Wash., placed first for the second straight year, with a score of 838. In the South Central region, the $14 billion-asset Trustmark in Jackson, Miss., topped the rankings with an 856 score. The $12 billion-asset United Community Bank in Blairsville, Ga., topped the Southeast region for the second straight year with an 854 score.

As for Wells Fargo, its performance in this year’s J.D. Power report is one that the San Francisco bank would probably like to forget. Wells placed last in four of the regions, and in the bottom five in an additional five regions.

Still, it could have been even worse. HSBC logged the single lowest score in any of this year’s rankings, with a score of 737 in the Mid-Atlantic region. The highest score this year was the 877 posted by the $15 billion-asset MidFirst Bank in Oklahoma City in the Southwest region.

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