J.D. Power survey: Direct banks grow popularity through customer service

Direct banks—branchless digital alternatives to traditional retail banks—continue to grow in popularity, based largely on “superior customer service,” according to the results of J.D. Power’s U.S. Direct Banking Satisfaction Study released today.

A majority of checking and savings customers (88%) said their direct bank is easy to do business with, and 85% said their accounts do not have hidden fees. Only 6% of checking and savings customers claimed their direct bank does not put the customer’s interests first. Among checking and savings customers, 59% said they have never had a problem or complaint with their direct bank. Among customers who experienced a problem/complaint in the past 12 months, 83% said it was convenient to reach customer service, and 88% reported their most recent problem was resolved.

“Today, 27% of banking customers in America use an online-only bank,” said Paul McAdam, senior director of banking and payments intelligence at J.D. Power. “As so much of our lives continue to shift to digitally based providers, direct banks have been in prime position to gain market share and mindshare by delivering around-the-clock access, along with products that have attractive fee structures and interest rates.”

Neobanks—online-only banking providers without federal banking charters that use white-label arrangements to provide FDIC-insured accounts—continue to gain customers who tend to be younger, less financially secure and more sensitive to banking fees, the survey noted. Neobanks lag direct banks across most key factors evaluated in the study, but show strong performance in areas such as personalization and innovative technology.

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About Author

Christopher Delporte is a senior editor for the ABA Banking Journal and editorial director for member communications at the American Bankers Association.