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The Green Sheet Online Edition

February 28, 2022 • Issue 22:02:02

The very point of sale: Banking on digital

By Dale S. Laszig
DSL Direct LLC

Financial analysts have called branch transformation a wake-up call for financial institutions, but not all banks are hitting the snooze bar on their digital clocks. In fact, a recent J.D. Power survey, published Feb. 3, 2022, found big banks outrank fintechs in customer satisfaction. Paul McAdam, senior director, banking and payments intelligence at J.D. Power, stated that small business customers gave banks high scores in payment processing agility and chargeback management.

"When we put fintechs side by side with the banks, banks hold up pretty well, particularly with customer service and resolving problems," McAdam said. "Within the context of all the other things we see at JD Power, the big thing that separates top-rated brands is satisfaction with fee structures, support and fee transparency."

McAdam noted that service is a second big differentiator separating big banks from lower tiers, especially with telephone service problem resolution and IVR solutions. While some fintechs may lag in problem resolution, providers like Chime, SoFi and Credit Karma have awesome technology, tools and interfaces, generally speaking, and reduce the need for service interactions because their customers don't have many problems in the first place, he added.

More than a number

During our interview, I recalled when bank branches were closing nationwide and in my hometown. My initial concern during this transformation was who would take care of me. Recognition based on a one-time password can only go so far. I want my bank to know who I am when I call in. However, my bank continued to do an amazing job with my small business account. I may be a micro merchant, but I'm a happy one.

McAdam said big banks have historically performed well in small business banking and with helping businesses migrate from old card readers to cloud-based POS systems. Noting that more can break down or go wrong in the card-present POS world, he said technology is becoming more reliable, and service and support have improved.

Commenting on the most surprising survey response, McAdam said, "I've been doing research for 20 years and have never seen a 14 percent increase in one year, but that's the increased percentage of businesses saying they're now using faster payments."

Transparent fee structures

McAdam also noted that banks are helping small businesses leverage faster payments initiatives. "Several years ago, large banks, the Fed, NACHA and others got the ball rolling," he said. "Fintechs were early movers but financial institutions are definitely catching up."

McAdams pointed out that Square, PayPal and Stripe simplified complex pricing structures, and banks and traditional service providers rapidly followed suit. Payments industry veterans often opine about simplifying pricing models, as Square did, and there are efforts to make that happen throughout the market—but explaining fee structures is just as important, he noted.

"Even if customers don't like the fees that they pay every now and then, they feel a whole lot better if they at least understand the fee structures and if they feel that the company is committed to the customer relationship," he said.

Big banks, big hearts

McAdam summarized four key points of the 2022 study as follows:

  1. Satisfaction with merchant service providers: Satisfaction improved by 23 points among merchants that obtain payment processing services from a bank, utilize card present payment acceptance channels, and have annual business sales/revenue less than $1 million.
  2. Satisfaction with cost of service: Satisfaction with communication and support relating to all types of fees are a critical priority for SMBs.
  3. Satisfaction with phone-based customer service: Satisfaction with prompt service and resolutions notably improved.
  4. Satisfaction with faster payments: Satisfaction with faster payments and same-day settlements is reflected by a 14 percent increase in adoption rates.

McAdam also stated that SMB owners were pleased by their banks' solicitous attention and services throughout pandemic-related shutdowns. Banks took steps to inform their customers of available assistance and access to working capital, he said, adding that in addition to COVID relief measures, access to credit and accelerated funding times, banks provided SMB customers with supportive communication, guidance and resources. end of article

Dale S. Laszig, senior staff writer at The Green Sheet and managing director at DSL Direct LLC, is a payments industry journalist and content strategist. Connect via email dale@dsldirectllc.com, LinkedIn www.linkedin.com/in/dalelaszig/ and Twitter @DSLdirect.

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