Banks Can Stop Losing Accounts with Some Simple Fixes

Attrition among retail banking customers could kick up by five percentage points in 2024, according to new research from J.D. Power.

The firm’s Retail Banking Satisfaction Study, based on responses from over 100,000 Americans, found that 8% changed primary banks, versus 5% in the 2018 edition. The study found that less than half of the people queried are certain they will stick with their primary bank. Among those considering switching to another primary provider, 4% said they will definitely change and 9% said they will probably change. If they all follow through, that 13% total would represent a 62.5% increase.

What’s driving this increase in dissatisfaction? J.D. Power reports that among the “definitely will switch” contingent, it’s a tie between poor service experience and having been charged too many fees or fees that are too high. Those who say they will probably change are motivated more because their primary bank isn’t paying competitive interest rates or because promotional offers from a new bank are too enticing to pass up.

The issue of poor service crosses all channels, because in today’s retail banking experience there are lots of chances to screw up (and more places for the aggravated to migrate). The study found that Americans interact with their banks about every three days, on average, for a total of about 31 times. This breaks down as follows: mobile app, 11.9 times; website, 9.6; ATM, 3.9; branch, 2.6; live phone, 1.1; online assistance, 1.1; and automated phone, 0.9.

The regularity of branch visits stands out, even today when the mobile banking app is the “bank” to many customers.

“That’s roughly every 10 days a customer says they’re interacting with a branch in some way,” says Jennifer White, senior director, banking and payments intelligence. White says that interaction could be as simple as using a lobby ATM or a drive-through window. Or it could involve seeking advice from live bankers. Overall, the statistic underscores that branches remain important.

Why Branches Continue to Play a Key Role for Many Consumers

In fact, the study found, while mobile apps keep adding new functionalities and navigation, customer satisfaction with branches begins with some evergreen basics.

Drop the ball on those and you risk attrition, even as the role of branches in the industry continues to evolve towards centers of advice rather than centers of frequent transactions. The lessons learned in branches have corollaries in other channels as well — and in competing with branchless fintechs that offer consumer accounts.

Even if consumers don’t immediately abandon their primary bank, dissatisfaction can lead to the opening of secondary accounts —the beginning of “silent attrition.”

In fact, the study found that Millennials, who are increasingly the bull’s-eye for consumer financial services, gave retail banks some of the lowest ratings on components of satisfaction. Among these were the people on the front lines — customer service representatives, tellers and call center agents among them.

“Millennials are returning to branches when they’re seeking advice or guidance when they’re opening new accounts or when they have a point of friction that they seek resolution on that requires a bit of reassurance,” says White. “In those instances, they see branches as essential.”

Branches continue to be a key differentiator between traditional banks and credit unions on one hand and fintechs that offer consumer accounts on the other, says White. The people factor, and experience, can also be a competitive strength in contact centers. White points out that fintechs have no branches for problem resolution nor advice and that a common complaint among consumers who call the fintechs’ contact centers is that they can’t obtain the help they need.

“Fintechs don’t necessarily have the same problem-solving solutions in place that banks do that have been catering to retail customers on an omnichannel basis for quite some time. If a customer will leave a retail bank for poor service, they’re going to leave a fintech for the same reason.”

— Jennifer White, J.D. Power

What Customers Seek in the Bank Branch Experience

Branch customer satisfaction scores among the sample average at 707 out of 1,000 possible points. However, banks that nail all the basics of branch service basics and provide additional services improve on that average by 123 points, coming to 830.

“All the service fundamentals still apply, whether you have a traditional bank that looks like the branch looked in ‘It’s a Wonderful Life,’ or whether you have a café like Capital One,” says White. Strong first impressions at the branch create a foundation for the best customer experience. If the basics aren’t observed, it is difficult to recover from the poor impression.

“You have to make the customer feel secure from the moment they start interacting with you,” says White. This is key to demonstrating to the customer that the branch staff has the ability to provide value-added service like financial advice. Missing the basics risks losing relationships, no matter how many bells and whistles may await the thicker-skinned.

Essentials include:

Welcoming the customer and determining what kind of assistance they need.
Keeping wait time to four minutes or less.
Calling the customer by their name. and
Thanking the customer for their business.

Couple those essentials with an appearance by the branch that at least causes no bad reaction and satisfaction gets off to a smooth start.

Part of the value that branches bring today is a measure of what White calls “softness.” This is the reassurance that a live interaction brings after a branch staffer has rendered a service or added a question that doesn’t come from a digital device or website.

One of the factors that can reduce retail customers’ banking satisfaction is branch closures or reductions of hours, according to the study. But White says having locations and adequate hours aren’t enough by themselves.

“If your branch cannot achieve the basics, what’s worse? Closing the branch or maintaining a branch that’s not delivering exceptional service?” asks White.

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Factors that Make or Break the Contact Center Experience

The average satisfaction rating for the contact center channel is 683 out of 1,000, but the study found that attention to details for that route can also notably raise satisfaction levels.

Among the factors that can raise satisfaction to as high as 782: using reps who are easily understood, greeting customers in a friendly manner, using first names for both rep and customer, and thanking the customer for their business.

“A bad first impression with a phone rep is harder to recover from than bad in-person interactions.”

— J.D. Power report

Resolving customer problems via digital channels actually results in the highest satisfaction levels for this function, but the study notes that issues broached with live phone representatives are typically handled at greater speed. There’s a tradeoff there that banks will have to work out over time.

Even so, says White, some problems benefit from the human touch, in a branch or in a contact center. Frequently customers who have been victims of fraud feel better when a person tells them an issue has been addressed.

See all of our latest coverage on customer experience issues.