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How digital and physical channels impact on customer satisfaction in retail banking

Senior Business Analyst and Financial and Banking IT Consultant, ScienceSoft


In April, 2017, J.D. Power published a new annual U.S. retail banking satisfaction study. For 12 years, J.D. Power has been examining responses of around 80,000 customers of 136 largest U.S. retail banks to create one of the most in-depth customer satisfaction surveys in the industry. The study explores the main drivers of customer satisfaction: channel activities, facility, fees, problem resolution, product offerings, etc., and analyzes their impact on customer retention and loyalty. Let’s dive into the key findings to see the effectiveness of retail banks at meeting customers’ needs and expectations.

Customer satisfaction in retail banking

What drives customer satisfaction?

Digital channels in focus

As stated in the study, retail banks’ customers, especially millennials and Gen X, highly appreciate the use of digital channels. In particular, J.D. Power highlights the widespread adoption of mobile banking channel among these customer segments (49% and 31% of active users respectively).

Besides, customer satisfaction is higher among those banks that link mobile payment services to customers’ accounts. This may include offering payment solutions based on NFC such as Apple Pay, Android Pay and Samsung Pay; developing proprietary payment services based on using QR codes; enabling digital money transfers among customers, and more.

Another path towards higher customer satisfaction lies in successful problem resolution. J.D. Power’s study indicates a 43.9% lower customer satisfaction in case customers’ problems were not resolved. It’s no wonder that only 20% customers are likely to reuse the bank that failed to handle their problems. Those banks that have succeeded in problem resolution via traditional channels can further advance by providing possibility to solve problems online or via social media. This feature will definitely generate goodwill among younger customers.

Branches still matter

Though retail banks enthusiastically embrace digital technologies, brick-and-mortar branches still play a vital role in gaining customer satisfaction. The study found that the overall satisfaction is considerably higher among customers who visited a branch within the year as compared with ‘online-only’ customers.

Despite the increased interest in digital channels, 71% of customers still visit physical branches. Even tech-savvy millennials follow the same trend averaging 11 branch visits during the year. Additionally, 78% of this age group still prefer to open new accounts in a branch.

Choosing the right combination

As we see from the study, customers cherish the freedom of choice. They prefer to have various alternatives on when, where and how to handle their financial affairs. Therefore, instead of choosing between the channels, retail banks should consider how they could effectively combine their online and in-branch capabilities. Specifically, they should decide on the relative importance of each channel, define its impact on all customer segments, determine which channel improvements can increase customer satisfaction and then make informed decisions where to make or cut investments.

Final note

In chase of higher customer satisfaction scores, the majority of retail banks have focused their time and budgets on digital initiatives, such as online and mobile banking development. Yet, the J.D. Power study shows that customers still need physical branches while they gradually explore and adopt digital advantages. For this reason, to ensure customer satisfaction growth, finding the right balance between the channels should be high on retail banks’ agenda. 

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