J.D. Power: Big Banks Show Significant Gains in Customer Satisfaction As Midsize Banks Decline And Regionals Plateau
Improved Technology and Better In-Person Interactions with Millennials Drive Historic Performance Improvement among Nation’s Largest Retail Banks
NEW YORK: 28 April 2016 — Big banks have significantly improved in overall customer satisfaction, while Midsize banks have declined and Regional banks have plateaued, according to the J.D. Power 2016 U.S. Retail Banking Satisfaction Study,SM released today. Satisfaction with Big banks rises for the sixth consecutive year, driven by a combination of improved digital offerings, more engaged personal interactions and stronger connections with growth segments of the population, while satisfaction with Midsize banks has dropped for the first time since 2010.
The 11th annual customer satisfaction study is the longest-running and most in-depth survey of the U.S. retail banking industry, with more than 75,000 customers evaluating various aspects of their banking experience. The study measures satisfaction in six factors (listed in alphabetical order): account information; channel activities; facility; fees; problem resolution; and product offerings. Channel activities include six subfactors (listed in alphabetical order): ATM; branch; call center; IVR; mobile; and website. Satisfaction is measured on a 1,000-point scale.
“Based on their current trajectory, the country’s largest retail banking institutions are expected to achieve a substantial lead in overall customer satisfaction vs. Midsize and Regional banks by 2020,” said Jim Miller, senior director of banking at J.D. Power. “This trend puts Midsize banks most at risk. Regulatory costs have made it difficult for them to invest in strategies to compete with larger rivals, and unless they take proactive steps to change course, we expect this to result in consolidation in the Midsize bank marketplace.”
Following are the key findings of the 2016 big banks customer satisfaction study:
- Big Banks Close the Customer Satisfaction Gap: Overall satisfaction in the retail banking industry improves to 793 from 790 in 2015. Satisfaction with Big banks improves 6 points to 793 from 2015, compared with 797 for Midsize banks, down 5 points, and 790 for Regional banks, remaining flat. Big bank segment satisfaction improves by 56 index points, nearly closing a 34-point gap with Midsize banks from 2010.
- Getting Tech Right: Big banks score highest in mobile (851), ATM (837) and online satisfaction (838). Mobile banking in particular has a direct impact on overall satisfaction, which is 27 points higher among customers who use mobile banking than among those who do not. Among mobile users who are satisfied with the mobile offering (mobile satisfaction score of 800 and above) the gap in satisfaction is 197 index points higher than among dissatisfied mobile users, those scoring below 800 index points (868 vs. 671, respectively).
- Winning in Growth Segments: Big banks have been most successful at acquiring and satisfying millennials, the fastest growing customer segment. Millennials represent the biggest growth potential for retail banks, but also pose much higher risk of attrition.
- Evolving the Branch Model: While the overall number of bank branches in the United States declines, brick and mortar branches are still a key channel for servicing customers in those moments of truth (e.g., resolving problems and dealing with more complex transactions). This is evident in user preference patterns, with the percentage of customers opening accounts online steadily increasing but the branch continually performing higher in terms of enhancing product understanding and reducing future problems.
“While customer satisfaction with Big, Midsize and Regional banks falls within a tight 7-point range, establishing customer service tools for competitive differentiation is key to a successful path forward,” said Paul McAdam, senior director of banking services at J.D. Power. “We clearly see that the customer satisfaction leaders in retail banking excel by hitting the sweet spot of providing a great digital experience backed by personal service.”
The study measures customer satisfaction with banks in 11 regions. Study results by region are:
California Region:U.S. Bank (808)
Florida Region: TD Bank (837)
Mid-Atlantic Region: Northwest Savings Bank (819)
Midwest Region: UMB Bank (821)
New England Region: Bangor Savings Bank (842)
North Central Region: Huntington National Bank (830)
Northwest Region: U.S. Bank (798)
South Central Region: Trustmark National Bank (855)
Southeast Region: United Community Bank (841)
Southwest Region: Arvest Bank (843)
Texas Region: Frost Bank (862)
The 2016 U.S. Retail Banking Satisfaction Study is based on responses from more than 75,000 retail banking customers of more than 130 of the largest banks in the United States regarding their experiences with their retail bank.
The study was fielded quarterly from April 2015 to February 2016:
Wave 1: April 1, 2015 – May 4, 2015
Wave 2: July 1, 2015 – August 3, 2015
Wave 3: September 21, 2015 – November 2, 2015
Wave 4: January 4, 2016 – February 3, 2016; February 18, 2016 – February 22, 2016
 Big banks are defined as the six largest financial institutions based on total deposits as reported by the FDIC, averaging $180 billion and above. Regional banks are defined as those with between $180 billion and $33 billion in deposits. Midsize banks are defined as those with between $33 billion and $2 billion in deposits.