As Deposit Balances and Financial Health Levels Sink, Personalized Advice and Guidance Become More Important Than Ever

Persistent inflation and an uneasy economy have rattled retail bank customers in the United States. According to the J.D. Power 2023 U.S. Retail Banking Satisfaction Study,^SM released today, the percentage of customers with $10,000 or more in primary bank deposit balances has declined 16 percentage points in the past year, while the percentage of customers categorized as financially unhealthy¹ has increased 9 percentage points. This shift is causing more customers to reallocate their funds in the hunt for higher interest rates or better savings programs, upping the ante for banks to deliver personalized advice and guidance.

“It’s an incredibly tenuous time for both bank customers and financial institutions, and the need for trust between these two parties has never been more pronounced,” said Jennifer White, senior director of banking and payments intelligence at J.D. Power. “Although our study was conducted prior to the recent high-profile bank crisis, the difficult economic conditions that contributed to the Silicon Valley Bank and Signature Bank failures have been building for quite some time. For banks to attain high marks in satisfaction and build the enduring loyalty that comes with it, customers need to feel supported through tough economic times. They need to be able to conduct their business with ease and feel like their funds are safe and secure.”

Following are some key findings of the 2023 study:

• Bank customers struggling but advice and guidance lacking: Overall customer financial health has declined 9 percentage points year over year and advice has been hard to come by, as just 21% say they received advice or guidance in the past year. However, banks that have effectively guided their customers have reaped the rewards. Customers who have received advice/guidance in the past 12 months are significantly more likely to have opened a new account with their primary bank, and the rate of new account openings grows even higher when the advice completely meets customer needs. Nearly half (47%) of those who received effective advice opened a new account.
• Urgency grows on fees, fairness and fraud: Since the 2022 study, more customers say they’ve experienced fees and fraud. The number of customers who were charged a fee in the past year has grown 5 percentage points while reports of problems related to fraud have increased 3 percentage points among customers experiencing problems. Customers facing these issues were more likely to be under age 40, categorized as financially unhealthy and have less than $10,000 in deposits. Banks that demonstrate fairness relative to fees and fraud gain an advantage. When customers receive communications on how to avoid fees, overall satisfaction scores increase 166 points (on a 1,000-point scale) and trust scores are 172 points higher. Additionally, alerts regarding suspicious account activity are the most common way that customers say their bank can show that they care about their customers’ financial well-being.
• Money on the move: The proportion of retail bank customers with more than $10,000 in deposit balances at their primary bank has declined to 28% from 44% a year ago, while the proportion with less than $1,000 in deposit balances has surged to 30% from 17% year over year. What’s more, 30% of primary bank customers have shifted, on average, 37% of their deposits to a secondary financial provider.
• Back to branches: Overall branch usage has grown to just below pre-pandemic (2017-2019) levels, and branch visits are expected to continue at this pace. Nearly three-fourths (72%) of customers this year say they plan to use their bank’s branches at the same rate in the coming year, and 38% of customers describe branches as essential. Of note, customers under age 40 are more likely to say they expect to see their branch visits increase in the next 12 months (21%) than are customers over age 40 (12%).

The study measures customer satisfaction with retail banks in 15 geographic regions. Highest-ranking banks and scores, by region, are as follows:

California: U.S. Bank (667) (for a third consecutive year)

Florida: Chase (686)

Illinois: Wintrust Community Bank (708) (for a second consecutive year)

Lower Midwest Region: BancFirst (697)

Mid-Atlantic Region: Chase (697)

New England Region: Bangor Savings Bank (723) (for a sixth consecutive year)

North Central Region: Huntington (696)

Northwest Region: Columbia Bank² (688)

New York Tri-State Region: Liberty Bank (718)

Pennsylvania: Huntington (694)

South Central Region: Bank of America (689) and Capital One (689) in a tie

Southeast Region: Synovus Bank (702)

Southwest Region: FirstBank (691) (for a third consecutive year)

Texas: Frost (728) (for a 14^th consecutive year)

Upper Midwest: Chase (661) (for a third consecutive year)

See the rank charts for each region at http://www.jdpower.com/pr-id/2023032.

The U.S. Retail Banking Satisfaction Study, now in its 18th year, measures satisfaction across seven factors (in order of importance): trust; people; account offerings; allowing customers to bank how and when they want; saving time and money; digital channels; and resolving problems or complaints.

The 2023 study is based on responses from 101,400 retail bank customers of the largest banks in the United States regarding their experiences with their retail bank. It was fielded from January 2022 through January 2023. National banks are defined as banks with more than $300 billion in domestic deposits; regional banks are those with $65 billion-$299 billion in domestic deposits; and midsize banks are those with 45-100 branches nationally and at least 20 branches within a respective region.

For more information about the U.S. Retail Banking Satisfaction Study, visit https://www.jdpower.com/business/retail-banking-study-1

About J.D. Power

J.D. Power is a global leader in consumer insights, advisory services and data and analytics. A pioneer in the use of big data, artificial intelligence (AI) and algorithmic modeling capabilities to understand consumer behavior, J.D. Power has been delivering incisive industry intelligence on customer interactions with brands and products for more than 50 years. The world's leading businesses across major industries rely on J.D. Power to guide their customer-facing strategies.

J.D. Power has offices in North America, Europe and Asia Pacific. To learn more about the company’s business offerings, visit JDPower.com/business. The J.D. Power auto shopping tool can be found at JDPower.com.

About J.D. Power and Advertising/Promotional Rules: www.jdpower.com/business/about-us/press-release-info

¹ J.D. Power measures the financial health of any consumer as a metric combining their spending/savings ratio, creditworthiness, and safety net items like insurance coverage. Consumers are placed on a continuum from healthy to vulnerable.

² As of March 20, 2023, Columbia Bank accounts and services have transitioned to Umpqua Bank.

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