Why customer satisfaction with online-only banks is declining

Online-only banks have thrived during the coronavirus pandemic as consumers have grown more comfortable with digital channels, but there is still room for improvement when it comes to communication – especially during a crisis.

Overall customer satisfaction with direct banking declined in 2020, according to a recent JD Power study, and the drop was most pronounced among consumers who also said they were in worse financial shape than they were. ‘one year ago. This is likely due to the fact that these customers were navigating fee waivers, loan abstentions and other difficult situations and often did not feel supported by their banks, JD Power said in its latest service satisfaction survey. direct banking.

“People who have recently had financial difficulties often explore or investigate their financial situation, including the different types of accounts they have. They’re trying to figure out the impact of fees and conditions and other things that they might not otherwise know about, ”said John Cabell, director of wealth and information lending at JD Power.

For the third year in a row, Charles Schwab Bank had the highest overall satisfaction score, 865 on a scale of 1000. Discover Bank, a unit of Discover Financial Services, had the second highest score, 862, and Ally Financial had the third highest score, 850. The average score among the nine online-only banks included in the study was 852, down 12 points from last year.

JD Power looked at the largest direct banks in the United States, that is, the branchless banks that offer a checking account. He didn’t look at traditional bank digital brands, like Citizens Financial Group Citizens Access or MUFG Union Bank’s PurePoint. And although he rated the USAA Federal Savings Bank in San Antonio, he excluded that bank from the rankings because it only serves military personnel and their families.

Digital banks gained more customers over the past year, as many banks have closed branches or restricted lobby access to stem the spread of the coronavirus and customers have been forced to de facto digital banking relationships. Online-only banks were particularly popular with younger consumers, but JD Power also found that consumers under 40 were less satisfied with these banks overall.

Certainly, some of the factors that lower customer satisfaction are largely beyond the control of bankers. For example, direct banks had to cut the interest they pay on consumer accounts after the Federal Reserve lowered interest rates to near zero in early 2020, which affected customer satisfaction levels. clients. Cabell also described a “general decline in sentiment” with financial services in general over the past year, perhaps because so many households faced financial hardship.

However, direct banks that communicated frequently and actively with their customers ranked higher in overall satisfaction scores. Among customers who felt that their bank had “completely[ed]”Them – say, removing the fee – the overall satisfaction scores were 201 points higher than those who said they received no support,” JD Power said.

“The brands that have been more successful in this area have really increased their perception of pandemic communication and pandemic response,” Cabell said. “This proactive communication is really important to all financial services brands and it seems to resonate well with customers.”

As traffic to digital banking channels increased over the past year, overall satisfaction with these channels has also declined, said JD Power. In particular, customers in this year’s study gave Direct Banks lower marks on ease of navigation, mobile appearance, and clarity of information provided on websites and apps.

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