Although online-only banks are still winning over consumers seeking higher interest rates, lower fees and easy access to accounts, those same users' satisfaction with their institutions is declining, according to a new report from J.D. Power.
Digital-only checking and savings accounts offered by companies such as Ally, Capital One and Discover have become
J.D. Power, which uses a 1,000-point scale to assess respondents' experiences, found that customers gave digital-bank checking accounts an overall satisfaction score of 688, down 27 points from 2023. Savings accounts received an overall score of 710, a dip of 8 points from the previous year.
Paul McAdam, senior director of banking and payments intelligence at J.D. Power, said although the company's research shows folks are still happier with digital-only banks than traditional institutions, the decline in satisfaction was "statistically significant."
"The sky isn't falling — it's one year's result," McAdam said. "What we think is really happening here is, because of the surge in new customer volume, it really does look like the customer service operations of these direct banks … was stressed and strained."
Per customer satisfaction ratings, some of the top-rated savings and checking account providers included Ally Bank, Capital One, Discover Bank and Charles Schwab Bank. Ally's savings account received a score of 743, and its checking account scored a 702. Capital One's savings and checking accounts were rated at 730 and 717, respectively. Discover's savings account won a score of 728 and its checking account got a 681. Charles Schwab Bank's savings and checking accounts pulled in scores of 713 and 732, respectively.
Ally Bank has 1 million checking account customers, 80% of which have savings accounts, the bank disclosed in a March presentation. Discover had $83 billion in checking and savings deposits in the U.S. in 2023. Schwab said checking and savings accounts made up about $27 billion, or 3%, of its total client cash mix, as of the first quarter.
The number of customers at all digital banks appears to be up. Seventeen percent of checking customers at online-only banks surveyed by J.D. Power were new to their institution, up from 12% in 2023. And the share of new savings customers had risen four percentage points to 13%. Yet those new customers said they are less likely to reuse the bank or say they have a personal relationship with the bank.
Even still, despite that feedback and the overall declines in satisfaction, 82% of checking account users and 86% of savings account users said they were unlikely to switch banks.
While drops in respondent sentiment can imply that banks aren't serving clients as well as they had been, certain wrinkles in gauging customer satisfaction can complicate findings, said Dylan Lerner, senior digital banking analyst at Javelin Strategy & Research. Factors like inflation and being an election year can lead to general customer dissatisfaction. Additionally, Lerner said that banks aren't just competing with banks, since people can weigh their customer-service experiences across online platforms.
"It's not really just fierce competition from within banking. You have people that interact with Amazon, and that experience might influence their expectations from their bank," Lerner said. "Rising consumer expectations could result in lower satisfaction even though it's nothing that banks stopped doing."
But banks can't just aspire to be functional, according to 2023 research from American Banker's parent company, Arizent. Users also demand personalization and appealing digital spaces, on top of speedy problem-solving and easy account-opening, the research showed.
To keep up,
"People are coming away with, 'there's something easier out there,'" Lerner said. "And it is increasing expectations, which of course, is the natural course of innovation. Someone bigger and better always comes along and becomes the new heavyweight that everyone sets to is the new standard."
McAdam said that the digital-only banks' products still outmatch traditional banks from a financial perspective. Per J.D. Power, 37% of consumers at traditional banks reported paying fees, versus 11% of digital-only consumers.
National banks and neobanks also saw similar declines in customer satisfaction in the past year, per J.D. Power data.
"Long-term, these online-only brands are very competitively positioned," McAdam said.
