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Thursday, May 30, 2024

J.D. Power: Digital banking, credit tools promising but lack personalization

While U.S. banks and credit card providers have excelled in creating efficient digital platforms, they struggle to build distinctive, personalized customer relationships in an increasingly homogenous market, according to recent J.D. Power studies.

The 2024 studies, which include the J.D. Power 2024 U.S. Banking Mobile App Satisfaction Study, J.D. Power 2024 U.S. Online Banking Satisfaction Study, J.D. Power 2024 U.S. Credit Card Mobile App Satisfaction Study, and J.D. Power 2024 U.S. Online Credit Card Satisfaction Study, indicate financial institutions have nearly perfected the basic functionalities of their digital services. However, they now face the challenge of differentiating themselves from competitors.

Jennifer White, senior director of banking and payments intelligence at J.D. Power, emphasized the importance of personalization in the digital banking experience. "As mobile apps and websites increasingly become customers’ primary point of repeat interaction, it's vital not only to offer a seamless experience but also to create a unique brand identity through personalization," she said.

Opportunities in PFM, digital assistants

According to the studies, the most significant opportunity for banks and credit card companies to distinguish themselves lies in the development of personal financial management (PFM) tools and digital assistants. These tools, researchers noted, can offer tailored financial advice and interactive functionalities that enhance customer satisfaction and loyalty.

"Highly targeted personal financial management tools and the use of virtual assistants that help guide customers through key functions present the largest opportunity to deliver that personalized connection to customers," White added.

Key findings from the studies reveal a growing interest in virtual assistants, particularly among younger customers, with common functions including checking account balances and making payments. Furthermore, person-to-person (P2P) payments and transfers are seeing increased adoption, with nearly one-third of U.S. national bank customers using these services on mobile apps, a steady rise from previous years.

Need for more awareness, engagement

Despite these advancements, the industry faces a plateau in consumer awareness and usage of PFM tools, which includes features like credit score monitoring, budgeting, and spending analysis. "While financial institutions are investing in these capabilities, consumer awareness and use of these tools are not growing at the pace of investment," White noted.

She highlighted that although most consumers maintain multiple bank accounts, the consistency in core functions across different digital platforms can help improve user understanding and ease of transactions. However, the challenge remains in making these tools part of customers' routine interactions with their financial institutions.

The studies rank various institutions on customer satisfaction with their digital offerings. For instance, Capital One and Bank of America were noted for their mobile app satisfaction, while TD Bank and American Express received high marks for online banking and credit card services, respectively.

"Investments in personal financial management tools are essential, but patience is required," White said. "Today's banks and credit card companies need to ensure that these tools not only exist but are actively promoted and integrated into daily customer interactions to truly benefit from higher loyalty and retention rates."

The digitalization of banking services has undoubtedly made financial management more accessible and efficient. However, as these platforms become more uniform, the next step for banks and credit card providers will be to create more engaging, personalized experiences that resonate with individual customer needs, ultimately setting them apart in a competitive market, J.D. Power noted. end of article

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