The Top-10 Drivers of Small Business Banking Satisfaction

Transcription:

Nick (00:08):

So that's a good prelude for what comes next. We're going to answer the question. So how are we doing in terms of our playing well with our small business clients and particularly on the digital side. In our industry, JD Power is a consistent and reliable provider of that feedback. How well are we playing with our small business clients and prospects? What's the experience like? How's it going? JD Power released their most recent survey three weeks ago, and I'm delighted to welcome Paul McAdam, Senior Director at JD Power to share the highlights of that study and the top banks in the us. Please welcome Paul.

Paul McAdam (00:46):

Thank you, Nick. Thank you. Thank you Nick. Really happy to follow Ginger from MasterCard. Good job in putting these two sessions together. I think it makes a lot of sense to provide information for you all in terms of what the voice of the customer is saying, small businesses. So as Nick said, I'm with JD Power. I manage our retail banking and small business banking studies in the US and Canada. Been here for eight years, been in the industry for about 30 the clicker. Yes, we need that. So we're going to channel a little bit of David Letterman here. We're going to do a top 10. We have top 10 satisfaction drivers from the most recent study that Nick mentioned, and we're going to walk through 'em. We're going to do a bit of a countdown leading into lunch. But first, let's show you the overall rank chart.

(01:36):

So this was released about three weeks ago. We've had this study now for 15 years. This year we surveyed over 7,100 small businesses. So we're in the field from the beginning of May to the end of August. Came out of field right before Labor Day. So you can see the rank chart. We use a thousand point scale in our rating system. What the rank chart tells us is that we have three banks that are definitely better. Capital One US Bank and Chase. Little Black Diamonds are indicators of statistical significance. So take away margin of error, take away the variance. That will always happen in a survey process and we can confidently say that these scores are higher. Capital One last had the highest score in this study two years ago. They've been no lower than the top three for the last five years. So it's not just a recent thing with interest rates and so forth.

(02:38):

They've been consistently solid performers, product digital, their customers really like their relationship managers and the personal service they're receiving in branches. So doing very well. US Bank really jumped up this year. The digital tools are a big reason why I think you've heard about that. At last year's conference, there was an executive from US Bank here this morning. They launched a really comprehensive digital suite a year or so back. Their clients like it, they really like it. The cashflow tools, the budgeting tools, it makes a difference. Chase, chase is a perpetually strong performer in our studies. Retail, small business banking, strong brand, strong reliability, viewed as innovative, trusted, and they're good at a lot of things, right? Good at servicing products, digital channels, they kind of have it all. So those are really the top three. We had a number of strong moves up this year.

(03:41):

The top of the rank chart, most of the brands moved up down toward the bottom. You can see we have some brands that are lower and many of them them moved down this year. Generally speaking, it's digital channels, it's account offerings, it's those types of services and problem resolution. If problem resolution isn't done well, it really blows things up. Those are some of the reasons why we have brands toward the bottom of this year's rank chart. So that's what we have in terms of the overall industry view. What else can I tell you here? Yeah, bank of the West, I mean Bank of the West no longer exists, but we included them in the study. BMO converted them over Labor Day weekend. We came right out of the field right before then, so we decided let's leave those folks in. So you can see Bank of the West First Citizens was our first year in the study.

(04:37):

They became large enough. We use deposits and number of branches and some basic criteria from the FDIC to determine the large banks that get into the study. So that's why we don't have a year over year on First Citizens, but as you can see, doing very well fourth place overall. Alright, let's get into the top 10. I actually have 12 giving you 12 instead of 10. Part of the reason is I wanted you to see this extended brand showers still do matter, not for all small businesses, probably fewer every year, but it still makes a difference. It is a satisfaction driver. So when I'm showing you these 12 metrics, what I need to make sure you understand is these are all statistically relevant. High correlation, they are drivers, right? This is not opinion, this is the data. These are drivers from the voice of the small business.

(05:35):

So let's see, some of you probably know, but who do you think that number one is? 71% extended branch hours got to be td, right? So that's actually the easiest one. As we roll through, I'll tell you who's number one, that's the most obvious of them all. The other thing I've included on these charts, you can see we put in here how much satisfaction goes up. I know a number of firms use net promoter score, so we have that in here too, but if small businesses feel that the bank has extended hours, they don't even have to necessarily use it. They just feel that it's there, it's available and sure, they probably do use extended hours periodically and yes, drive-through does count on this. We can see that around 50% of small businesses feel like they have the opportunity to do business with their banks past five o'clock basically is what this is saying.

(06:30):

So number 12, oh, and let me just show you how I'm getting these calculations of how satisfaction goes up. 81 net promoter goes up 23. What we use is this terminology, we call it met versus not met. So if customers feel this way, if they have this experience, we check the box, oh, that's met. Yeah, that's a yes basically, right? Yes versus no. So what we're saying is that if customers feel that the bank has extended hours, satisfaction can go up. But for those half of the small businesses who feel like my bank doesn't offer that, I wish they did well, satisfaction goes down 81 points, right? That's what I'm meaning as we're walking through these metrics. Okay? So we have branches, number 12. Number 11 never had a problem. And this means never, never ever in our survey we ask, have you had a problem last three months, last six months last year, and then we have ever have you never had a problem?

(07:31):

They have the option to check that. So if small businesses have never had a problem, satisfaction will go up. Now you can see here about 35 40% are saying they've never had a problem. So 60, 65% are saying, yep, I've had a problem at some point in time, may have been a while ago, but if the small business feels like they've ever really had a problem satisfaction in that promoter score go down. And then on all these slides, it's over there. All these slides, we are giving you little tidbits and the most we have here, the highest incidents problem types, give you a little bit of information like that on each of these pages as we walk through it. Fees, availability of funds, fraud, fraud shooting up. By the way, I think you all know that it's really, really rising year over year. We've seen that for the past couple, for both retail and small businesses.

(08:29):

All right, so we're now actually officially into the top 10. Number 10, the small business feels that someone from the bank is assigned to them to manage their small business relationship. It's a satisfaction driver as we would all imagine. Now we're up to satisfaction boost of over a hundred points in our thousand point scale. And as you can see, 27 on a net promoter. So the thing we see here is, again, I hadn't really pointed it out, but I think you get it. We have quite a distribution of results in the study. We're not showing you all the specific brands, but you can see there's a bank up there where nearly seven in 10 of their small businesses feel like they have someone and then some other banks are quite a bit lower. That's actually m and t. M and t Bank is number one in small business AM assignment.

(09:25):

But the thing is, small businesses, 60% of the time they actually identify a specialist, business banker, maybe wealth manager, maybe a lending person, but 40% of the time it's someone in the branch. It's having a contact. And what we actually ask, we go further and ask, well do you know this individual's name? 80% of the time they do. So it's they've got a name, they've got a number, they know somebody, they don't necessarily care about the title because when we break this down by satisfaction, satisfaction of whether the client thinks it's a business banker versus a branch manager or even a personal banker, satisfaction levels are the same, hate to tell you, but the small business client doesn't view a whole lot of differentiation in that satisfaction level between an RM and more of a traditional branch role. It's all important as long as they feel like they have someone that someone accessible, they know a name.

(10:23):

Those are the things, those are the things they want. You want to communicate to your client base. Alright, let's go to number nine. Number nine, receiving proactive communication. Now, this is basically any type of communication, but they have to feel it's relevant. So it's about products and services, it's about business needs. Just simply receiving email, a statement, stuffer, any type of communication can boost satisfaction if it's done well. And as you can see, about 80% of the time on average, small businesses feel like, yeah, in the last three months I'm getting information here, I'm getting stuff sent to me proactively from my bank. That's helpful and it provides a really, really nice boost in satisfaction. What we actually see is that small businesses tell us, you can basically communicate 'em with about once a month. You can see on the bottom right hand side of the slide, once you start to get over 12 or more communications in a year's time, there start to be a little bit of diminishing returns.

(11:36):

But small businesses are very, very active in seeking advice from their banks far more so than consumers like double right? In terms of interest in seeking advice and actually receiving advice as the previous speaker queued up, there are a lot of reasons why small businesses want information and help from their banks and communication can be part of it. That top one this year happens to be Bank of the West, right? With our fielding period taking place right before they integrated over to BMO, they were obviously and good for them, they were obviously very proactive in communicating what's happening. They did a nice job with that. Okay, eight. Kind of following on to the proactive communication point here we have receiving advice. So about 55%, a little over 50% of small businesses feel like their bank has provided advice at least once in the last 12 months. Now, okay, should that be higher? Probably, I think probably we would like more than 55% of our small businesses feeling like we're providing advice, but it's worth the effort. It's worth the lift because you can see we're now up to about 130 point gain and 30 34 on the net promoter rating.

(13:08):

In terms of the types of advice that really strongly resonate, small businesses want help with fees. They want to understand them, they want you to tell them how to avoid them. That's really the number one thing we are telling banks when you're communicating, just remember fees. Don't leave it out because in this environment and with inflation and everything, we all understand why this would be the case. It's really more important than ever. And we're seeing that for both small businesses and retail customers right now, communicating about fees. They want spending and savings guidance. They want help understanding their credit score and how to improve the small business's credit worthiness. Digital tools, digital tools count as advice in the eyes of a small business. And so if your institution has digital tools that allow them to do things like categorize expenses, categorize revenue by client, by product, by these types of things, they lift satisfaction.

(14:17):

So offering these tools does help and we will count as advice for you. Number one, in advice regions bank, their small business clients are most likely to say they're receiving advice. Okay? Number seven, bank explained its fee structures and this is one where the industry overall is doing pretty well. 85%. So show this one to the regulators. Small businesses overall feel like 85% is a good number. It's kind of hard to get a whole lot higher than that, right? But it definitely matters. We're now up to 154 lift in our satisfaction model. If the small business is in that 15% who feels like things aren't explained, satisfaction plummets. So that's the way this works. And you can see the box that I have in the bottom right there. Maybe just let me just point out what we're showing you there. And this has paid a fee in the last three months.

(15:19):

So if the small business has paid a fee to the bank in the last three months, but they feel the bank has not explained the fee structure and our a thousand point scale, we're down to below 500 in an overall satisfaction index score 4 96, that's really low, right? You remember earlier you may recall the study average is six eighty five, so that's really low. But look down at the bottom, even for those customers who paid a fee, paid a fee, but if they feel like the bank explained it, we're up to a seven 13. So that's a really, really nice lift and just shows you, this is another one to not forget about the big things they say are they want clear information on the website to help them understand fees and they wish the bank staff would do a better job of just explaining the fee structures how to avoid.

(16:12):

So keep that in mind. So explaining fee structures number six, another one relating to fees. This one's specifically on the business checking account. Small business feeling that they completely understand the fee structure. And you can see here we're down to around 55% on average. So we have 85% feel that the bank explained 55% have complete understanding. This is a high bar. This is one of those in research where we're using sort of the top box completely, right? If they're down toward the middle, somewhat or lower, that doesn't count here. So you only get the lift if the small business is really, really has as a firm understanding of the fee structure. And as you might imagine, small businesses who feel that they have less than a complete understanding of fee structures, they tend to be smaller, tend to not have a relationship manager, tend to not have the deeper relationship with credit and so forth.

(17:24):

So they tend to be your smaller single service folks and women owned shouldn't forget about that. Those are the areas you want to really concentrate your communication on to boost this. Hold on, let me check my notes. Who's number one here down to the top five? Have to make sure I'm letting you know this. Alright, who's the best number six. Ah, this is another Bank of the West. Bank of the West obviously leading up to integration. Decided they were really going to hit this hard prior slide in terms of explaining fee structures was Bank of America. Bank of America is number one. What we see is their small businesses really Bank of America gets a lot of lift from their preferred rewards program that they offer for small businesses where they have the clients have the opportunity to bundle and deepen the relationship to avoid fees.

(18:26):

They also do really smart things like in their statements they communicate, oh, here's what you did to avoid fees, right? You hit this balanced threshold, you own a certain number of products, whatever it is. But the point is they're communicating it. Small businesses in our research notice it and it helps them. Alright, we're into the top five information in the most recent contact with or from the bank. This could be from a person, this could be communication, email, letter, different, any type of communication if the small business feels that was tailored to meet business needs. Satisfaction goes up 176 points. Net promoter, we're up now at a 50 point plus climb, and here again about three quarters of the time, small businesses feel that banks are doing a good job and a lot of these communications will be in person where it's just easier to connect and provide this information in a tailored manner.

(19:35):

But the things that are really resonating, the types of information that get the highest tailored rating in our work. Tips for reducing costs and fees. Again, just making that point. Again, super important in today's environment. Advice for small business owners, helping them out, giving them clues and tips on things they can do. Small businesses are very interested and appreciate receiving information about the new technologies you have to offer about the new payment services recommendation. Tie these into saving time, that'll help those communication resonate even more strongly. And updates about branches, small businesses still use branches, so they really, really like receiving anything that's happening with branches, locations, hours, events, things involving the community, all that that works. All that works. All right, number five. Now going into number four, easy to get the help you wanted on the phone. Now, who doesn't appreciate this one, right?

(20:47):

So this could be a call to the rm, could be the 800 number in the research. We break it all down. Actually, those phone calls where they're trying to reach someone in the branch are the least easy from the perspective of small businesses. Obviously if they have an rm, the 800 number is easy enough to get ahold of. So think about that in terms of those of you who have more branch-based staffing servicing models for small businesses, but easy to get help on. The phone is a big one here, and this is one where you can see quite a range. That's first Citizens Bank, that's number one. So good for them. They're really nailing it here. And there are some brands of about 30% lower here that need to do some work here. I mentioned getting help from the branch causes friction. Obviously the IVR, the IVR jumps in here.

(21:47):

Definitely you can see that. Attempting to get servicing and needing to go to a person, finding it not easy to understand. The rep certainly impacts this metric. And certain problem types when there's a phone problem, interaction problems relating to the website or digital problems relating to certain product features not working. I mean admittedly these are probably things for the person on the phone or a bit harder to solve, but we see that getting help on the phone is a whole lot easier when it's the simple stuff. Maybe a transaction error, an address or some sort of contact information was wrong, right? Those are obviously easier than more difficult problem types. Okay? Number three supports our business in challenging times. Now this one's more of a feeling, right? More of a belief. The other things we've been talking about are really more experiences that occur.

(22:58):

This one is if we run into tough times, the bank will be okay, they'll help us. That's this belief. So about 60% of small businesses feel this way and this is the third most important satisfaction driver. When we take a look at other experiences that impact this, we have 'em on the slide. Resolving problems. Yep, makes sense. Understands the bank's mobile services. So has a deep understanding of mobile, knows the tools, knows how to use it, familiar. This helps build this sense that the bank is there supporting them. Ease of getting help on the phone. You could imagine that would there. The rm, the primary point of contact being a trusted advisor, that certainly helps with this idea of being there in challenging times and understanding the fee structure. So missing the mark on any of those things can drive down this really important perception.

(24:10):

Number two is another one that is a perception, but based on experience for sure, confident that the bank will be able to handle. These are the key words. The bank will be able to handle our future financial needs. So they've been there, they're reliable. I see 'em doing things that can help us in the future. They're not going to mess things up. I know someone a lot of things that can go into this, but it's the previous speaker said, I mean small businesses wake up and they're, yeah, they're thinking about today, but they're also thinking about, man, this is coming down the road in six months or next year, I need to do that. So they want to know that their banks will be there for them and we'll be able to handle whatever it is that the small business might throw at 'em.

(24:59):

Again on this one. In terms of the key drivers, many of the same things that I just spoke about before, resolving problems, ease in the phone. Relationship manager here you see two at the bottom that are digital related. So ease of getting transactional information, ease of paying bills online, understanding the mobile app boost this overall perception. So digital does matter. Digital does help to shape some of these influencers. Okay, now I'm excited. How about you we're coming up to number one. Any guesses? Any guesses? Oh, well hold on, hold on. Let me back up. This one and the one prior completely supports in challenging times. Number one is chase. So we saw Chase number a pie in the rank chart with their brand and reputation. I talked about that a bit. They're the highest in these two metrics. Now number one, what have we not talked about?

(26:02):

What have we missed? What could it be? Well, it's a pretty basic one, but super fundamental, resolving problems. So if there is a problem, is it resolved? Get a 313 point satisfaction lift. So in our thousand point scale, think about that. That's like a 30% lift in this index. If this KPI is met and now as you can see, the industry does a really pretty darn good job of resolving problems. 90% of the time small businesses feel like the problem is resolved to their satisfaction. That's higher than consumer. Consumer we see is about 80. So small businesses are getting good service. I should mention in our overall index scores, small business is quite a bit higher than retail as well. So the higher touch, the personal service, they notice it much more so than retail customers. But problem resolution, super important. We have a tie at the top.

(27:12):

It's Capital One and Chase are right there at 95% problems being resolved, which is really great. The problem type that's really toxic or the problem types that are toxic are poor service in the branch or poor service on the phone. For those problem types, only about 60, 65% of clients that experience those feel like it was resolved because, well, obviously once you had bad service, it's kind of hard to fix that, right? Unless there's some sort of follow-up or remediation. But the point is it lingers. It lingers and it's kind of toxic. So resolving problems is really, really fundamental. So putting these 12 together threw a lot at you. But here's a way to think about 'em. Putting these 12 metrics together, they're all really important. Some of these very clearly or related to trust, having someone assigned, having that point of contact, not having problems, the bank is there, supportive will be there in the future.

(28:26):

Understanding fees is just paramount. Explaining them, making sure that there's understanding, going that extra step of helping small businesses understand how to avoid fees, service quality, we talked about some of that. Resolving problems, help on the phone, extended hours. And then communication and advice. I mean it's pretty meaningful. I think that three of them, the 12 are centered around communication, providing advice and the communication in those contacts feeling tailored. So marketing face-to-face, communications, all that. Super, super important. So what's not here? So these are the 12 most important in our study. And we analyze dozens, right? And there are about 30 metrics that are highly correlated satisfaction drivers. We are picking the top 12 here for you, what's not on the list, right below this top 12, we have four or five metrics related to the rm, easy to reach, responsive works as a team, understands our goals.

(29:37):

So below the top 12, but super important. And then below those next four or five that are RM related, there are four or five metrics that are related to digital tools. So we hadn't talked about digital a whole lot, but they're really important. Ease of finding information, paying bills, some of those digital tools I talked about, understanding the mobile app, all these things help to boost satisfaction. So that's what we have for you Pre-Lunch of good luck in your efforts to move these metrics, to optimize these metrics. Let us know if we can help in any way. Thank you.