Small and regional banks have historically outperformed their larger competitors in customer satisfaction, but their rankings have slipped during the pandemic, according to a new consumer survey released by J.D. Power.
The very largest U.S. banks, including JPMorgan Chase, elbowed their smaller peers out of the top spots in several geographic regions on the strength of their digital offerings and better clarity around fees, J.D. Power said in the survey, which was released Tuesday.
Customer satisfaction was highest among people who felt their bank had supported them in 2020, say by providing fee waivers or late payment forgiveness. Consumers who felt they were financially worse off than they were a year earlier gave particularly high marks to the largest banks.
That’s largely because big banks had more resources to devote to customer relief and to make upgrades to digital channels that consumers came to rely on as they adapted to the limitations of the pandemic, said Paul McAdam, senior director, banking intelligence at J.D. Power.
“Part of it was consumers seeking it themselves because they’re under financial pressure and looking for help, but also we know that banks just communicated a lot more about ways to help and fee policies,” he said. “The largest banks were able to handle that better than the smaller banks. We see here again the scale advantages playing out to the advantage of the larger banks.”
Nearly one-fourth, or 24%, of respondents said they were financially worse off than they were a year earlier, compared with 14% who said as much in the 2020 survey.
The proportion of digital-only customers also jumped to 41% from 30% a year ago, and J.D. Power said that satisfaction also improved the most among heavier users of digital channels.
Among nearly 95,000 U.S. consumers surveyed from April 2020 through February 2021, 63% said their bank had “completely supported” them during the pandemic. That support included procedures modified to limit the spread of COVID-19, community relief such as donations and supplies, fee waivers and late payment forgiveness.
J.D. Power surveyed customers of banks with physical branches, ranging from the $6 billion-asset Bangor Savings Bank in Maine up to JPMorgan Chase and Wells Fargo. It did not include customers of digital-only banks, like Ally Financial, and it scores each bank along a 1,000-point scale.
As recently as 2018, big banks trailed small and regional banks by 17 points on the survey’s overall customer satisfaction metrics, but that gap closed to just four points this year. Big banks, defined as those with more than $260 billion of deposits, earned an average score of 816 this year, up from 810, last year, while banks with $2 billion to $55 billion of deposits received a score of 820, the same grade they received in 2018. Banks with $55 billion to $259 billion of deposits, earned a score of 817, up from 816 last year and 806 in 2018.
Another major strength for big banks was clarity they provided on fees, specifically on ways to minimize them or avoid paying them altogether.
“Lack of clarity around fee structures is such a powerful diminisher of satisfaction,” McAdam said. “The largest banks have really focused on that and done well.”
JPMorgan Chase’s retail bank performed especially well, earning high marks for online and mobile banking capabilities and its clear communication with customers.
The retail banking satisfaction survey, now in its 16th year, also ranked consumers’ satisfaction with banks across 15 regions. The $554 billion-asset U.S. Bancorp, for example, was the highest-ranked bank in California, with a score of 818 out of 1,000. It edged out Chase, which held the No. 1 spot in that state last year. Chase held onto its No.1 ranking in Florida and in the South Central region — made up of Alabama, Louisiana, Arkansas, Mississippi and Tennessee — it overtook the $24 billion-asset Arvest Bank for the top spot.
Another large bank, the $468 billion-asset PNC Financial Services Group, ranked No. 1 in the New York Tri-State region, a new category in J.D. Power’s survey. Last year, those states were included in the mid-Atlantic region, where the $9 billion-asset S&T Bank in Indiana, Pa., was ranked No. 1. Chase also held the No. 1 ranking in Illinois. Last year, however, J.D. Power grouped Illinois into a larger region.
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