Driven by the prospect of higher interest rates, lower fees, and around-the-clock access, new customers flocked to digital banks during the past year. This, according to research and key findings shared in a new banking sector report.
For the most part, the direct banking institutions delivered “on their end of the bargain.”
However, according to the J.D. Power 2024 U.S. Direct Banking Satisfaction Study, released recently, struggles with customer service and timely problem resolution “dragged down overall satisfaction scores.”
Paul McAdam, senior director of banking and payments intelligence at J.D. Power, said:
“Customers of online-only direct banks have higher levels of satisfaction than customers of traditional banks, but satisfaction among direct bank customers declined this year, particularly those with checking accounts. Despite significant increases in deposit interest rates for both checking and savings accounts—but decreases in the proportion of customers who had to pay a fee or experienced a problem—overall satisfaction still declined. That’s because customers who experienced problems had a very tough time resolving them in a timely manner, causing satisfaction with the ease of problem resolution to decline sharply.”
Following are some key findings of the 2024 study:
- Satisfaction declines year over year, but still higher than traditional banks: The overall customer satisfaction score for direct bank checking accounts is 688 (on a 1,000-point scale), down 27 points from 2023. Overall satisfaction for direct bank savings accounts is 710, down 8 points from 2023.
- Problem resolution drags down customer satisfaction: While fewer problems were cited in this year’s study, the problems customers did experience were more complicated and took longer to resolve, causing satisfaction with the problem resolution process to fall 67 points. The total amount of time required to resolve a problem grew to 2.6 days in 2024, up from 1.9 days in 2023.
- Problems with debit cards and fraud mount: The most significant declines in problem resolution satisfaction are focused on problems with debit cards, fraud and unauthorized account activity and problems with interest rate paid on a deposit account. The number of customers indicating that it was convenient to reach and interact with live phone representatives declines 3 percentage points this year.
- Mobile apps and websites need a refresh: Use of mobile app and website features also declines this year. Even among customers who have not experienced a problem with their direct bank, the visual appeal, the range of services that can be performed and clarity of information provided via digital channels had significant declines.
The U.S. Direct Banking Satisfaction Study, now in its eighth year, measures overall satisfaction “with direct bank and neobank checking and/or savings/money market products based on seven dimensions (in alphabetical order): customer service; ease of moving money; helps grow money; level of trust; managing account via mobile app; managing account via website; and reduce banking fees.”
The study defines direct banks “as online/branchless institutions with federal banking charters, with either the Federal Reserve Board, the Office of the Comptroller of the Currency (OCC) or the Federal Deposit Insurance Corporation (FDIC) as their primary regulator.”
It is based on responses “from 8,648 direct bank customers and was fielded from December 2023 through March 2024.”