Study: A Rise in Branchless Banking Exposed CX Weaknesses

Stay Connected

Blog updates via Email

Direct or branchless banking should have flourished in an environment where the COVID-19 pandemic accelerated a shift to digital channels, but it’s more complicated than that, according to J.D. Power’s latest U.S. Direct Banking Satisfaction Study.

The study, which is based on responses from more than 3,200 direct banking customers that were collected between December 2020 and January 2021, shows that the overall satisfaction for direct banks is down 12 points from last year’s study. While digital and mobile channel innovation continue to set the pace for the banking industry, the increased digital channel traffic has exposed weaknesses in the customer experience, according to the research firm.

Branchless banking gets the spotlight

When it comes to mobile and online banking sites, “specific shortcomings include clarity of information; ease of navigation; and appearance of interface. Additionally, customers this year are less likely to say that direct bank websites provide enough information to answer all their questions,” the study reports. Other factors driving the decline in customer satisfaction include a lack of competitive rates for checking, savings, CD, and money market accounts due to historically low interest rates and a tough economic environment.

The J.D. Power study’s findings are in line with other research, such as the 2020 Forrester U.S. Banking Customer Experience Index. According to the Index, “customer service is the most important driver category for multichannel banking CX” and the website/mobile app is the least important driver category.

In 2020, banks were inundated with digital customer service requests at an unprecedented volume while branches were in lockdown. This created a perfect storm where digital and mobile banking sites were quickly shoved to the forefront of a financial institution’s brand and customer experience—regardless of whether these channels were ready.

At the same time, 33% of retail banking customers plan to increase their use of online and mobile banking services post-pandemic, according to Captech. The signals are clear: as branchless banks and other financial institutions enter an environment transformed by the pandemic, it’s imperative that they fix the problems and short-comings that were exposed last year.

It’s showtime

It’s a mistake to assume that fixing a bank’s website or app is enough to drive customer retention and loyalty. Banking leaders must think holistically. Take stock of the overall customer experience and examine your business through the customers’ eyes. What are the pain points and what areas can be improved and optimized while reducing costs?

The employee experience drives CX so it’s also important to incorporate employee feedback into the CX transformation and ensure employees receive the right training and tools to deliver better services. The past year may have upended banking customer behaviors and operations but now is the time to use that momentum to evolve into the type of bank that customers want today.

To learn more about the CX trends that are transforming banking, check out our “Top 7 Eye-Opening Predictions for Banking 2021.”