June 28 — Direct banks continue to outperform traditional retail banks in overall customer satisfaction, but these branchless institutions are showing some signs of vulnerability. According to the J.D. Power 2018 U.S. Direct Banking Satisfaction Study, direct banks have lost ground to traditional retail banks in terms of customer understanding and mobile experience. Key performance metrics — providing tailored information to meet customer needs, understanding product features and understanding fee structures — have declined year over year.
“Direct banks have traditionally occupied a niche of the retail banking marketplace where they serve mainly as secondary banks with competitive products and strong digital- and phone-based tools that drive high levels of customer satisfaction,” said Bob Neuhaus, financial service consultant for J.D. Power. “However, these banks still represent less than 10 percent of industry deposit share, and they are experiencing some deterioration in customer satisfaction with customer understanding and mobile offerings. If they want to evolve from a secondary to a primary bank relationship, they need to focus on cross-channel consistency and ramp up their digital capabilities.”
The overall satisfaction score for direct banks is 863 (on a 1,000-point scale), which is 57 points higher than the overall satisfaction score for traditional branch-based retail banks. As for mobile usage, 77 percent of direct bank customers indicated they had used the mobile channel (up 5 percentage points from last year), but customer satisfaction with the mobile channel has declined 8 points in the last year. This makes mobile channel satisfaction the narrowest performance lead compared to retail banks, with a 14 point gap.
Moreover, only 43 percent of direct bank customers consider their direct bank to be their primary bank. Overall satisfaction among that percentage is 873, 18 points higher than among customers who consider their direct bank to be a secondary banking relationship. Primary banking customers are more engaged, making an average of 41 contacts with their bank, compared to only 21 contacts for secondary customers.
The survey also found that social media is playing an important part in marketing for direct banks. Over a third of direct bank customers who have opened a new product in the last 12 months (38 percent) reported they were influenced by social media to open the new product, and 50 percent of Gen Y, Gen Z and mass affluent customers cited social media as being influential in their decisions.
Capital One 360 ranked highest in overall direct bank satisfaction with a score of 867, with Ally Bank coming in second (865), followed by Charles Schwab Bank (863).
The survey, now in its second year, measures overall satisfaction with direct banks based on five factors: channel activities, products and fees, communication, new account opening and problem resolution. These factors include five subfactors: online banking website, mobile banking, assisted online, live phone and automated phone. Results are based on responses from 2,709 direct bank customers nationwide and was fielded in April 2018.
For more information, visit http://www.jdpower.com/resource/us-direct-banking-satisfaction-study.