Banks high in customer satisfaction but low in trust - can they improve and why do they need to?

The spread of digitalised services for banking has grown omnipresent. Banks expanded their services into online support and digital banking services as the rise of fintech and challenger banks sparked innovation sector-wide. These services have increased customer satisfaction concerning traditional institutions, however, consumer trust remains low. 

New research has though shed some light on banking services and their impact on satisfaction and trust.

Customer satisfaction

Overall, the research found that customers are pleased with their current services. The research demonstrates 82% of UK banking customers marked their satisfaction with their banking services as above average, with 30% of these customers expressing complete satisfaction with their service. These figures represent a banking sector that has evolved quickly to understand the demands of its customers. Banks have diversified service offerings by leaning on tech-based functions such as mobile banking, automated processes, BNPL lending and facilitating third-party APIs.

Considering digital offerings, 33% of customers showed maximum satisfaction with these services, however above-average ratings decreased when compared to the full array of offerings at 73%.

Customer satisfaction correlates to provider loyalty - 78% of customers are not looking to switch banking providers. Additionally, banking customers actively recognise and appreciate the technological innovation banks have made in recent years; 70% of customers agreed banks were keeping up with technology at appropriate rates - only 13% disagreed. However, younger customers less aware of past banking procedures display the largest disagreement - 52% said they agree.

Communication and service use

The relationship between technological innovations and customer preferences is cyclical, with one enforcing the other. Digital innovation has created an environment where 69% of customers prefer to rely on remote, digital functions rather than liaise with the bank directly (17%). This data suggests that digital banking methods have increased the ease, efficiency and accessibility of managing finances for everyday people.

Providing these services to a wider range of customers must be an ambition for banks going forward, with 17% of customers still not using an online banking app. When discussing bugbears around online banking apps, 61% of those surveyed demonstrated frustration at a variety of issues. The majority of these issues centred around functionality and user experience ranging: difficulties with the app working (14%) poor in-app user experience (12%) the inability to pay in cheques (8%) complex login processes (7%) slow payment delivery (7%) and the inability to speak to someone directly (14%).

These statistics indicate a need to optimise in-app functionality for better user experience, however, it is the last data point - the inability to speak with a bank employee directly - that is most significant. 

Communication 

When asked how customers would ideally like to communicate with their bank, human communication was preferred by larger portions of clients. Compared to chatbots (6%), in-person communication was the chosen method for 26% of customers; over the phone communication and email were selected by 20% and 14% of banking customers respectively. These figures represent a key challenge for banks, which aim to satisfy customers with varying digital and in-person preferences. 

Digital service investment has been well-founded by banks, with 67% of customers wishing to conduct their finances via an app. However, with 17% of customers still preferring direct bank liaisons, it is clear in-person preferences remain a key factor in ensuring a trusting and agile relationship with customers.

Trust throughout economic volatility

Trust in managing finances over tumultuous financial periods remains volatile. The research indicates that, despite 39% of customers trusting their bank to help them in a recession, 17% state that they would not trust any banking service to help them in this regard. Within this, a significant portion (14%) of customers rely more on digital banks to help them during times of financial uncertainty.

Digital banks have offered solutions that are quick to market and geared towards ease-of-use for customers, capturing tech-savvy younger demographics utilising open banking, embedded finance and BNPL that suit the spending habits of younger demographics more closely. Digital banks also do so without the reputation baggage attached to many Trad-fi players.

The larger issue at play is that 19% of customers said they wouldn’t trust any financial service to help them manage their finances during a recession. Combined with 42% of customers worried about the effect of the recession on their bank and savings and 17% unsure, a lack of trust in banks’ robustness is evident.

The banking future - innovate services to increase trust

This research displays how customers view both, their finances and banking providers, as the recession takes hold. Customers are generally loyal to their current banking provider, yet many hold a layer of uncertainty about the efficacy and robustness of their chosen service. So, although banks are satisfying their customers, particularly with advancing digital offerings, more needs to be done to gain higher trust.

Banks can gain customer trust by increasing awareness and accessibility of digital services. The 17% of customers who do not use mobile banking omit themselves from regular communication and the efficiency benefits of financial management on the go. In short, they’re missing out on effective digital banking solutions and may not acknowledge that easier financial management can impact trust in their provider. One way to resolve this issue is to increase awareness, communicating with customers who do not have mobile banking through written statements, when they visit in-branch or over the phone.

It is clear digital banking apps must constantly review their UX strategies. When customers use a service that is difficult to navigate, has poor user experience, or malfunctions, these experiences reflect negatively on the perceived efficacy of how banks deal with other processes - such as recession-proofing. As mobile banking apps are the main source of communication providers should try to create an experience as smooth and comprehensive as possible. A seamless app can have a determining effect on how a customer perceives a bank’s whole operation.

Further research like this will encourage a deeper exploration of the financial landscape for banks and their customers. For now, optimisation must take place across digital services to provide a more accessible service. This action, combined with further awareness of customers not taking advantage of digital offerings, can play a key part in raising trust levels in the future.