The Digital Divide: Can Small Banks Keep Pace?

The positive impact of a strong digital offering has pushed satisfaction levels for the largest banks above all other sized organizations for the first time ever.

By Jim Marous, Co-Publisher of The Financial Brand and Publisher of the Digital Banking Report

According to the 2016 U.S. Retail Banking Customer Satisfaction Study published by J.D. Power, the six largest banks (Bank of America, Citigroup, JPMorgan Chase, PNC Financial, U.S. Bancorp and Wells Fargo) have taken the lead in customer satisfaction for the first time ever. The primary reasons include better consumer-facing technology and better in-person interactions, as well as the impact of positive performance scores from Millennials, emerging affluent consumers and minorities.

The research, based on detailed surveys of 20,000 banking consumers, evaluated the performance of retail banking organizations classified as Big Banks (assets of $180 billion or more), Regional Banks (assets of $33 billion – $180 billion) and Midsize Banks (assets of $2 billion-$33 billion).

The highlights of the report are included below.

Big Banks Take the Lead for the First Time

As shown below, the biggest banks, while improving their satisfaction scores over time, have always trailed small and mid-sized banks in overall customer satisfaction. But since 2012, the biggest banks have improved their satisfaction scores by 50 points (to 793 on a 100 point index) to close the initial 40 point gap and achieve the highest overall satisfaction scores of all categories of retail banks.

According to Rocky Clancy, vice president of the financial services practice at J.D. Power, “This improvement could be the result of significant focus and investment by the larger banks on all digital and non-digital components that combine for an improved customer experience.”

Big Banks Do Best With Millennials, Emerging Affluent and Minorities

While the big banks have outpaced small and mid-sized banks by improving satisfaction with every generational and income category of consumer (as shown below), they still lag small and mid-sized banks with Boomers, Pre-Boomers and the affluent consumer. The real appeal of the biggest banks is with Millennials, emerging affluent and minorities (specifically black/African-American, Latino/Hispanic and Asian/Asian-American).

Big Banks Do Digital Best

The impact of digital technologies on customer satisfaction continues to be apparent in JD Power Customer Satisfaction surveys. In 2015, there was a noticeable decline in the online and mobile banking satisfaction levels for the biggest banks, attributed to the increasing expectations of digital consumers going unmet.

Continued heavy investment in digital channels by the biggest banks was rewarded in this most recent survey, however, with the top six banks showing significant improvements in all digital categories. The Big Banks scored highest in online satisfaction (839), mobile (858) and ATM (841) interactions in the most recent study.

The inability for the majority of regional and mid-sized banks to keep pace with investment in digital technology became more apparent in the most recent survey, with online, mobile and ATM satisfaction levels all being below 2015 levels. In fact, it is possible that the prioritization of investment in the mobile channel has had the most significant impact on mid-sized banks, where the lowest satisfaction in four years is seen for both online and ATM channels.

To read more about the how digital is impacting consumer satisfaction, go to the complete article here ...

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