Bank customers prioritize engagement, studies show

With inflation and economic uncertainty looming, banks and credit unions are leveraging digital technologies in an effort to deepen customer relationships, according to new studies by Engageware and J. D. Power.

On Dec. 8, 2022, Engageware released its second annual Engage 2023: Customer Engagement in Banking, Annual Trends Report. Based on surveys conducted by Infosurv, the study examined the efficacy of current customer service initiatives across the U.S. financial services landscape, according to Caroline Platkiewicz, senior marketing manager at Engageware.

"In today's challenging economic climate, financial institutions need to be closely attuned to the changing needs and preference of their customers," Platkiewicz said. "In addition to our annual survey of banking professionals, we complemented our findings with a proprietary survey of U.S. banking consumers to understand their attitudes, behaviors, and expectations of their primary financial institution."

Meeting consumer demands

Engageware surveyed bank and credit union professionals in a variety of roles at institutions ranging from $250 million to $20 billion, Platkiewicz noted. Data accumulated from this survey and interviews with over 450 bank customers can help FIs craft strategies, she added.

"When FIs create avenues for their customers or members to engage, they are more likely to entrust their PFI with important financial decisions, thereby positioning the bank or credit union for long-term success," she said. In addition, she cited the following key learnings from the surveys:

• Offset customer inflation fears with solid service: During a recession, relationship banking and financial planning services should be a focus. Researchers found 84 percent of consumer and 91 percent of bank professional respondents believe the U.S. economy is in a recession or will be in one soon.

• Overcome workforce challenges with digital technologies: Improving digital adoption is a key to overcoming workforce challenges. More than half of the banking professionals surveyed cited digital adoption as their top digital priority for 2023.

• Optimize staffing to deliver superior customer engagement: Optimizing staffing is essential for delivering superior customer engagement. More than 50 percent of banks and credit unions surveyed wanted to increase staff to deliver strong customer engagement.

• Boost customer engagement to satisfy customer demand: Boosting customer engagement is key to attracting and retaining customers. Only 54 percent of consumers believe their FI understands their needs; even fewer (43 percent) have bank or credit union representatives who can answer their financial questions.

Additional information and a full copy of the report are available at info.engageware.com/hubfs/Resources/Engageware-Engage-2023-Customer-Engagement-Banking-Annual-Trends-Report.pdf? .

Solving issuer challenges

J. D. Power's U.S. Small Business Credit Card Satisfaction Study, also released Dec. 8, found small business owners faced with inflation and supply chain issues are not getting necessary financial guidance and support from their financial service providers. Researchers noted small and midsize businesses (SMBs) have reported lower sales growth compared to 2021 and have low economic expectations for 2023.

John Cabell, managing director of payments intelligence at J.D. Power, agreed the last few years have been tough on SMBs, with 65 percent impacted by inflation and 51 percent continuing to experience supply chain challenges.

"Accordingly, the small business outlook for 2023 is down significantly and many businesses are looking to their credit card issuers for help," he said. "This is a real moment of truth for card issuers that currently have an opportunity to position themselves as a valuable source of support and guidance for small business customers through a combination of proactive outreach, rewards promotions and personalized account management."

Fighting inflation

Cabell further noted overall satisfaction among SMB credit card customers is down to 851 on a 1,000-point scale, one point decrease compared with the previous year. Nearly two-thirds (65 percent) of small business owners say inflation severely impacted their business.

Following are additional key findings from the study:

• Spending decreases, revolving debt increases: Debt spirals and spending cuts reflect austerity measures in response to inflation. Only 25 percent of small business owners plan to increase business-related spending on credit cards in 2023, down from 29 percent a year ago. Only 46 percent expect to spend more than $5,000 per month, down from 50 percent a year ago. The small businesses with revolving debt category has grown to 44 percent from 39 percent in 2021.

• Mixed results for reward programs: Researchers found satisfaction in credit card rewards programs dropped among SMB cardholders affected by inflation, both in terms of rewards earned per dollar spent and by spending frequency. Overall customer satisfaction with airline reward cards increased 12 points over the past four years. During the same period, co-branded card satisfaction declined 37 points.

• Relationship management improves customer satisfaction: Overall customer satisfaction is a significant 35 points higher when small business owners are assigned a dedicated account manager by their credit card issuer. Among business owners who indicated they are worse off this year than a year ago, the assignment of a dedicated account manager is associated with a 77-point increase in customer satisfaction.

To find out more about this study, visit jdpower.com/business/press-releases/2022-us-small-business-credit-card-satisfaction-study .

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