J.D. Power: Consumers losing trust in big banks

Consumer trust in the nation’s largest retail banks has declined significantly during the past two years due to unexpected fees, poor customer service, and bad press, according to the J.D. Power 2024 U.S. Retail Banking Satisfaction Study.

As a result, 13% of bank customers say they’re likely to switch institutions in the next 12 months.

The report, based on responses from more than 100,000 retail customers of the largest banks in the U.S., measures satisfaction across seven dimensions: trust, people, account offerings, convenient access, savings of time and money, digital channels, and complaint resolution.

“Despite widespread efforts to improve the customer experience, many banks are missing the mark on critical customer touch points by treating customers like numbers,” says Jennifer White, J.D. Power’s senior director of banking and payments intelligence.

Conversely, credit union members are 1.5 times more likely than nonmembers to say they’re “very positive” their financial institution has improved their financial health, according to a 2023 FrederickPolls national voter poll.

In addition, the America’s Credit Unions’ Credit Union Impact Dashboard reports that credit unions deliver billions of dollars in financial benefits to members and nonmembers through lower loan rates, higher saving yields, and fewer and lower fees.

Some key findings from the J.D. Power study:

• Bank customer satisfaction is flat while trust declines. Trust fell significantly for the second consecutive year. The top contributors to this loss of trust: unexpected fees, delayed availability of deposited funds, news reports about bad banking practices, errors blamed on customer actions, and closed branches and reduced hours.
• Customer loyalty is at risk. In 2024, 8% of retail bank customers say they’ve changed their primary bank, up from 5% in 2018. Plus, 13% of retail bank customers say they “probably will” or “definitely will” switch banks in the next 12 months. Only 46% of bank customers say they’re certain they’ll remain with their current bank in the next year.
• Account fees and poor customer experiences hamper loyalty. Among those customers who are likely to switch banks in the next 12 months, 29% say it’s because they were charged either too many or high fees for products and services, and 26% say they had a poor service experience.
• Customer satisfaction improves when financial institutions deliver on the basics, such as welcoming customers to the branch, delivering fast service, thanking customers for their business, and calling customers by name.

“Every contact and every interaction influence customers’ experiences and satisfaction,” the report states.