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J.D. Power released its 2022 US Retail Banking Advice Satisfaction Study last week, revealing a downward trend in customer satisfaction with their financial institutions. 

The study found that despite 59% of banking customers expecting their financial institutions to improve their financial health, only 47% of financially healthy consumers have received advice. Of the remaining 53% of consumers, 28% of vulnerable consumers, 16% of over-extended consumers, and 9% of stressed consumers reported receiving advice.

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According to J.D. Power, financially healthy consumers are consumers who can cover immediate financial needs while still planning for the future. Financially vulnerable consumers are consumers who have trouble meeting immediate needs -- such as monthly bills -- and can't think about future financial stability. 

Over-extended consumers are defined as consumers who may have savings for the future -- like a 401k -- but struggle week to week. Stressed consumers are those who can make their bill payments but struggle with long-term savings and future planning.

In addition to the findings above, the study revealed that overall satisfaction with advice and guidance that consumers did receive is down from last year, with the largest decline being in both the frequency and quality of advice regarding financial needs. 

Furthermore, the study found that 63% of consumers indicated that they received advice two or more times, compared to 70% of customers a year ago. The greatest decline occurred in advice dealing with saving tips, at a time when perhaps it's most needed.

Capital One had the highest satisfaction rating for retail banking advice, followed by Citibank and Bank of America. Bank of America had the highest rating for supporting financial health. American Express had the highest rating for supporting financial health among credit card issuers, followed by Bank of America and Discover.

Source: J.D. Power

The advice consumers need

With inflation, interest rate hikes, record-breaking gas prices, and the rising cost of necessary goods weighing heavy on the minds of many consumers, it has never been more important for financial institutions to support their clients' financial health. So why are they missing the mark?

Also: Financially-healthy consumers dropped to 43%. Here's how banks must step up

"Personalization is the current roadblock," Jennifer White, senior director for banking and payments intelligence at J.D. Power, told ZDNet. "The data that we have in this annual study shows that 63% of customers recalled receiving two or more types of advice. That's down from 70%."

According to White, it's not just one area of advice from financial institutions that's declined. It's financial planning, fee reduction, investment advice, quick tips, and how to save for an emergency, among others.

"I find it hard to believe that institutions as a whole just started marketing less and sending out less information," she said. "So that tells me that the resonance of the messaging, and the marketing of it, whether it be from mobile apps or online banking, aren't connecting."

That means the issue isn't with the frequency, but with the content itself. According to J.D. Power, when the advice consumers receive is generic, bland, or cookie-cutter, consumers experience less satisfaction. 

On J.D. Power's thousand-point scale, a single piece of personalized advice contributes to a consumer satisfaction score of 697 compared to a score of 583 from a consumer who received five pieces of generic advice.

Personalized advice is advice that meets consumers where they are. It could be how to avoid a fee they just paid, or an alert directly related to their account activity. If the bank suggests a financial product that it thinks would be a better fit for consumers based on their behaviors, customer satisfaction significantly increases.

White said healthy consumers are looking for advice about wills, estate trusts, measuring their financial health, and learning what steps they should be taking. Financially vulnerable consumers are more likely to want to sit down and discuss their financial situation and how best to tackle debts they're facing. But both populations want to know if they're going about things correctly, if they're on the right investment and retirement track, and if there are any technologies or digital services that can help them.

Advice also could come in the form of reassurance. That could be messaging that confirms the transaction the customer initiated has been completed successfully or messaging letting the consumer know it's been initiated but will take two days to complete.

"It's about personalizing the message in a way that it connects with the customer," White said. "And for a customer to see a message as being relevant, the bank needs to recognize the customer's financial health status in addition to their behaviors. Combine those two together, and the relevance and resonance should increase."

How banks can get personal

"Customers are looking to feel connected, and that can occur digitally. How are [completely] online brands in any industry building loyal customer bases? By delivering content that's relevant to the customer," White said.

Most online brands are doing so by leveraging data collected using artificial intelligence (AI) technology. Something, according to White, that most consumers are looking for their primary banks to do to create truly personalized advice and guidance. So why haven't banks done so?

It has to do with regulations, lack of trust in the technology, and debates around whether it would produce the desired results. That said, banks have been adopting aspects of AI technology, with industry investments in AI and automation expected to top$182 billion in 2022.

Institutions including Wells Fargo and Goldman Sachs utilize AI for robo-advisory investment platforms as well. It seems only a matter of time before banks start to integrate the technology into their marketing.

However, delivering heightened personalization in terms of advice isn't the only challenge banks are facing in their efforts to increase customer satisfaction. 

Bridging the gap between physical and digital banking

As things shift more from a brick-and-mortar banking experience to digital, it's become harder for banks to deliver the level of service that many consumers have come to expect. According to S&P Global Market Intelligence, US bank branch closures increased by 38% in 2021.

"Digital, as wonderful as it is, is not a 100% replacement for a personal, intimate conversation about your finances with a representative from a bank," White said. "But it can set you on the right path. And for many customers, it's all they really feel they need. But for other customers, it's not the same. As a result, customers who are only engaging digitally -which isn't necessarily a high proportion -tend to have lower overall satisfaction scores than those who are mingling channels in some way."

With a decrease in face-to-face interactions, banks have less opportunity to deliver advice in an environment where consumers are more likely to retain it. They also face more challenges in terms of building a relationship with the client. But that doesn't mean delivering on both of those metrics is impossible. According to J.D. Power, digital tools are the key to bridging the gap between the physical and digital banking experience.

Utilizing digital tools to reinforce what was discussed in the branch could be key in raising overall customer satisfaction with their financial institutions, whether it's their bank or a credit card issuer.

"If you don't have the digital tools that back up the messages that come out, if you don't have the tools that really are almost omnichannel with what the representatives in your bank are offering, then you have a missing piece of the puzzle," White said.

Delivering personalized advice is only one aspect. Another is creating tools that allow consumers to have greater control over their financial situations. Tools that can empower consumers to truly manage their finances during times of financial stress.

"Brands that have incorporated digital tools that are specific to advice and guidance or the key areas that really hit financial health -savings, budgeting, managing spending, paying down debt, or even just managing your borrowing in some way -and are complemented with those same services in branch, those brands are outperforming brands that have a series of well-rounded digital tools but are more transactionally focused," White said.

The convenience that digital tools can offer consumers, mixed with an in-person representative, can go a long way in making customers feel supported by their financial institution. 

"Having a strong in-branch experience that's complemented with the ability to replicate that digitally [can empower clients] to manage [their] finances," White said.

The study comprises the responses of 5,177 retail bank customers in the US who received advice or guidance from their primary bank about relevant products and services or other financial needs in the past 12 months. The study was fielded from January to February 2022.

Finance

Inflation is about to change grocery shopping for goodThe 5 best high-yield savings accounts: Not your standard savingsHow AI is making Gen Z the most financially sophisticated generationThe 5 best credit cards you can (and should) keep foreverWant a job in finance? Here are your options

• Inflation is about to change grocery shopping for good
• The 5 best high-yield savings accounts: Not your standard savings
• How AI is making Gen Z the most financially sophisticated generation
• The 5 best credit cards you can (and should) keep forever
• Want a job in finance? Here are your options