With Digital Emerging as Prevailing Banking Channel, Customers Still Prefer Personal Touch, J.D. Power Finds
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Heritage Bank Ranks Highest amongst Financial Institutions; Commonwealth Bank Tops Major Banks
MELBOURNE: 5 Dec. 2017 — Despite the high penetration of digital banking in Australia, when customers have a problem, they still prefer the personal touch, according to the J.D. Power 2017 Australia Retail Banking Satisfaction Study,SM released today.
In the past 12 months, 89% of banking customers have used a digital channel to interact with their primary bank. However, customers still prefer to visit the branch or call a bank representative when they have a problem (86%) or question (73%). This is also the case for digitally savvy Millennials, with 85% preferring to speak to a person when they have a problem and 66% when they have a question.
“With most customers choosing to raise a problem or question with a bank representative directly either at a branch or on the phone, closing bank branches and driving a digital agenda is not going to address this pain point,” said Anthony Chiam, Practice Leader Service Industry at J.D. Power. “The bank branch still has an important role to play for the customer, but pain points online and on banking apps also need to be fixed if banks want to move more customers to these channels. Ultimately, if banks do want to transition to digital, they need to make sure their customers are ready to follow.”
Customer friction with online services needs to be addressed if customers are expected to make this switch to digital. The study finds that 32% of customers indicate having experienced a problem accessing their online banking account and 34% say that they have experienced an issue with the mobile banking app. However, branches also need to drive improvements related to hygiene factors, as 48% of customers say that they were not welcomed at the branch.
Moreover, the study finds that 14% of customers indicate having experienced a problem with their bank in the past 12 months. Of these customers, 26% have experienced a problem with the customer service provided at the branch or on the phone.
Following are some of the key findings of the 2017 study:
- Banks need to deepen their relationship with customers: In the past 12 months, 18% of customers opened a new account with another bank rather than their primary bank. Customers who receive tailored information from their banks are far more satisfied than those who do not (796 vs. 703, respectively, on a 1,000-point scale). Similarly, these customers are more likely to use additional products from their bank, with 63% saying they “definitely will” use their bank again when they need a bank product, compared with only 33% who do not receive tailored information.
- ATMs are problematic: Nearly one-third (32%) of retail banking customers say that their primary bank’s ATM was down or out of service in the past 12 months. Top reasons cited include that it was being serviced by bank staff or security (30%); required functionality was not working (24%); and/or it was out of cash (20%).
- Millennials more likely to switch primary bank: One-fourth (25%) of Millennials are considering switching their primary bank, compared with the study average of 16%. Generally, customers are looking for fair fees and interest rates in addition to a quality service experience and would likely switch to another bank if their expectations are not met.
- Mobile payment usage: Nearly one-fifth (19%) of customers have a mobile payment service (e.g., Apple Pay, Android Pay, and Samsung Pay) linked to their bank account. The proportion is higher amongst Millennials, 30% of whom have mobile payment services linked to their accounts.
Heritage Bank ranks highest in retail banking customer satisfaction amongst non-major banks, with an overall satisfaction score of 827. Heritage Bank achieves the highest score in four of the six study factors: product offerings; facility; account information; and account activities.
Commonwealth Bank tops the major bank segment with a score of 747. Commonwealth Bank performs particularly well in the product offerings; facility; account activities; and problem resolution factors.
About the Study
The 2017 Australia Retail Banking Satisfaction Study measures customer satisfaction on the product and service provided by their primary financial institution. The study measures overall satisfaction in six key factors: account activities (38%); account information (16%); product offerings (15%); fees (14%); facility (13%); and problem resolution (4%).
The study, now in its second year, is based on responses from 4,330 retail banking customers. The study was fielded between September and November 2017.
J.D. Power conducts a series of retail banking studies across key financial markets, including Australia, Canada, China, India, Singapore and the United States.
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About J.D. Power in the Asia Pacific Region
J.D. Power has offices in Singapore, Bangkok, Beijing, Shanghai and Tokyo that conduct customer satisfaction research and provide consulting services in the automotive, information technology and finance industries in the Asia Pacific region. Together, the five offices bring the language of customer satisfaction to consumers and businesses in Australia, China, India, Indonesia, Japan, Malaysia, Philippines, Taiwan, Thailand and Vietnam. J. D. Power is a portfolio company of XIO Group, a global alternative investments firm headquartered in London, and is led by its four founders: Athene Li, Joseph Pacini, Murphy Qiao and Carsten Geyer. Information regarding J.D. Power and its products can be accessed through the Internet at asean-oceania.jdpower.com.
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 J.D. Power defines Millennials as those born between 1982 and 1994.