Cause and Effect: If you build it, will they come?

July 23, 2014
/   Spotlight

Many financial institutions assume that digital banking is lucrative because the most valuable customers happen to bank online. While there is certainly a correlation between online bankers and higher profitability, quantitative evidence suggests that...

Intuit 2020 Report: The Future of Financial Services

April 11, 2011
/   Insights

Today, Intuit released the latest edition of the Intuit 2020 report, Intuit 2020 Report: The Future of Financial Services, which identifies and examines four key trend areas that will  transform the financial services industry...

Fast Facts: Student Loans

January 22, 2013
/   Insights

The Financial Services Roundtable recently released another iteration of its Fast Facts, reliable, bullet-point research about issues facing the financial services industry. Topics span TARP, Dodd-Frank, insurance, lending, retirement savings and more.  Below are some updated Fast...

The Top 10 Trends in the Digital Banking Industry

December 18, 2013
/   Spotlight

2014 is rapidly approaching and as the year wraps, the Digital Insight team has pulled together the top 10 trends in the digital banking industry based on data and trends from studying financial institutions....

Making Banking Fun: Gamification in Financial Services

August 5, 2013
/   Insights

Recently, the team sat in on American Banker’s webinar, “Gamification in Financial Services: Five Proven Ways to Get an Edge,” which shared how leading brands in financial services have applied gamification to reach...

Technology M&As: The Beats Go On

May 29, 2014
/   Insights

The ongoing fascination with Apple’s $3 billion purchase of Beats Electronics is entirely understandable, because it’s a cool story. However, it also says a lot about what’s going on between finance and tech.

What We’re Reading

May 5, 2011
/   Spotlight

Below are interesting stories the staff has been reading over the past week. What have you been reading? Let us know in the comments section below. Virtual Banking Worlds Provide Tangible Lessons American...

Small Business: Perception vs. Reality

November 21, 2012
/   Insights

In the most recent election cycle, like most others before it, the one sector of the economy that got the most attention was small business.  This is the future, we were told by every...

What We’re Reading: Thanksgiving Edition

November 22, 2012
/   Spotlight

Below are interesting stories the staff has been reading over the past week. What have you been reading? Let us know in the comments section below or Tweet @bankingdotcom. Mobile Thursday? Plans for Thanksgiving...

There are times when the release of a new survey of the banking industry can trigger a sinking feeling.  Haven’t we had enough bad news already?

Well, cheer up: The J.D. Power 2016 U.S. Retail Banking Satisfaction Study brings good tidings for most segments of the banking sector. And going against widespread perceptions, that actually maintains an extended streak.

First, larger institutions—those dreaded Big Banks—have jumped in overall customer satisfaction. . .again. In fact, that’s how it’s been for six straight years.  There’s more than a single factor at play here—the blitz of digital tools with user-friendly features, a renewed emphasis on personal engagement with customers, and targeted outreach to specific customer groups have all helped boost the satisfaction ratings.

The results get even more interesting when we drill down a little. Periodically derided for lacking agility and innovation, at least when compared to tech firms crashing the industry, those larger institutions actually score highest in many of the categories that matter most in this digital-driven environment: mobile, ATM and online banking.  The first of those, mobile, is truly a standout, drawing satisfaction scores 27 points higher among customers who use mobile banking than those who don’t. And while there’s no telling what particular platform on consumer preference might emerge next, that unquestionably bodes well for the future.

In fact, this trend leads directly to perhaps the thorniest issue: keeping millennials happy. This is clearly the fastest growing customer segment, and also the most fickle. Those pesky young people switch platforms and tools without hesitation, and that takes its toll on institutional loyalty—the growth potential is matched by attrition rates. Well, the new survey reveals that big banks are indeed the most successful at acquiring and satisfying millennials, the fastest growing customer segment.

Branches represents another area fraught with complications. It’s an issue that’s been explored often on this blog and others—as online and mobile banking become the norm, what happens to the outlets that have always served as the face of the corporation? The J.D. Power study acknowledge the ongoing evolution in this corner of the industry, and highlights the contradictions involved.

To be sure, the number of branches is indeed falling. However, they’re not about to completely disappear either—while customers open accounts online in greater numbers, they also appreciate the value of a brick-and-mortar establishment that can  enhance the understanding of complex financial issues. In other words, branches will remain, provided they can embrace their new functions. While customers go online for many basic services, they like the idea of a physical entity with real-life individuals to help sort through more complicated process—think mortgages or bank loans.

The J.D. Power study, which has been going for 11 years, is arguably the largest of its kind. It’s billed as the “longest-running and most in-depth survey of the U.S. retail banking industry,” with part of the research involves querying 75,000-plus customers about their banking experience. Those seeking more specific insights will find that the report measures satisfaction in six factors: account information; channel activities; facility; fees; problem resolution; and product offerings. There are more focused analyses as well, on subjects ranging from ATM-related services to Interactive Voice Response and the appeal of the corporate site.

For the record, any examination this comprehensive is bound to turn up less happy news, and this one is no exception. Specifically, while the bigger banks are doing better, midsize banks are doing worse, although they still retain high satisfaction ratings in many areas. This is indeed a troubling trend that we’ll explore in greater depth later. For now, however, it spears that unless there’s a full-on course reversal, midsize institutions are at risk. In fact, without some major changes, we could be seeing major consolidation in this sector within a few years.

Again, this is one study covering one year—given the pace of change in contemporary business, we might get very different results in the next iteration. But that won’t happen without proactive changes on the part of those facing darker times ahead. This report makes it clear that big banks have stepped up, with extensive resources devoted to online and mobile initiatives, even as their branches changes their basic operating procedures.  Those efforts are definitely paying off. It might be time for other industry segments to change too.


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James W. Gabberty

Gabberty is a professor of information systems at Pace University in New York City. An alumnus of the Massachusetts Institute of Technology and New York University Polytechnic Institute, he has served as an expert witness in telecommunication and information security at the federal and state levels and holds numerous certifications from SANS & ISACA.

Zachary Ehrlich

25-year-old writer, and as a native San Franciscan, I am unreasonably loyal to Bank of America, if only for their superhero-like origin story, involving the 1906 earthquake and Italian fruit vendors.

Brad Strothkamp

Marisa Mann

Marisa Mann brings over 15 years of experience in consulting and financial services industries to the Solstice team, working on large scale enterprise initiatives across many technologies, including specializing in the digital space – Internet and mobile. Mann is passionate about mobile and the endless possibilities for the enterprise, delivering business value through strong brand recognition and driving to excellence in the consumer experience. Prior to Solstice, Mann worked at JP Morgan Chase, Diamond Management and Technology Consultants, Washington Mutual, Inc, and Accenture.