Banks that have embraced technology have gained digital-only customers in recent years, but new research suggests the move has been costly in terms of customer satisfaction.
The J.D. Power 2018 U.S. Retail Banking Satisfaction Study found that 28 percent of bank customers are now digital-only, yet they are the least satisfied among the banks' overall customer base.
Paul McAdam, senior director of the Banking Practice at J.D. Power, says investing in technology helps banks reduce their costs. But technology can also provide a barrier to customer engagement, a key element of the banking industry's traditional business model.
'Growing digital divide'
Three decades ago bank customers visited a branch to cash a check, where they might know the tellers. They might even get a toaster if they opened a new account. McAdam says there is a sizable segment of consumers that like that approach.
"Right now, retail banks need to address the growing digital divide that is emerging within customer segments,” he said. “Successfully navigating that transition will require banks to provide better, more personalized advice that is consistent across both digital and branch interactions and to ensure that customer needs are met, regardless of channel."
The study found that bank customers who only used online or mobile banking were the least satisfied among all bank patrons. Customers who only did their banking at a branch were slightly more satisfied. Consumers who used both branches and online banking were actually the most satisfied bank customers.
Drilling deeper into the data, the study authors found that communication appears to be the weakest link in digital banking's relationship with customers. Digital-only customers said the main source of their frustration with their bank came in the areas of communication and advice; products and fees; and opening a new account.
Communication has long been an issue for bank customers. In a recent post at ConsumerAffairs, James, of Alpharetta, Ga., voiced his frustration about dealing with his bank when it froze his accounts.
“Unable to pay bills, process checks, take out cash that is legally ours,” James wrote. “We have over $100K in checking and deposit and they put a freeze on us. Something about our mother-in-law who was on the account many years ago had to contact the bank. She is 80 years of age and in poor health and did not know what she was calling about. I could not tell her either as the bank would not tell me.”
It's not just aging Baby Boomers who are frustrated with their banks' technology. The study found the biggest satisfaction gap between digital and branch-dependent customers is among millennials, followed by Gen X. But McAdam says the satisfaction problem is fixable.
"Some of the best practices being pioneered today by digital leaders include highly personalized digital interactions along with branch transformation efforts that serve the needs of both digital-centric and branch-dependent customers."