Why banks and credit card providers still struggle with advice formulas

By Puja Sharma

Personalized Financial Advice: Key to Retail Bank Customer Engagement in Tough Economic Environment, J.D. Power Finds. U.S. retail bank customers have been through the ringer during the past few years. Inflation, market volatility and rising interest rates have contributed to increased prices for goods and services, leaving 69% of customers classified as financially unhealthy.

According to the J.D. Power 2023 U.S. Retail Banking Advice Satisfaction Study released banks that address this challenge head-on with personalized financial advice are earning high customer satisfaction and building strong customer engagement. However, just 38% of customers recall ever receiving such advice. Among those, just 55% say it completely meets their needs.

“Banks are sitting on a goldmine of customer goodwill and significant opportunities to build lifetime customer value by delivering financial advice and personalized guidance to their customers,” said Jennifer White, senior director for banking and payments intelligence at J.D. Power. “When advice hits the mark, customer satisfaction increases 228 points, but most bank customers still don’t recall ever receiving such advice. Among the small proportion that do receive advice, only 55% say it was effective. There’s still a great deal of work that needs to be done to unlock the full value of this powerful tool.”

Key findings:

• Customer satisfaction with financial advice surges: Overall satisfaction with the advice and guidance provided by retail banks rises 37 points year over year to 638 (on a 1,000-point scale). The increase is evident across all attributes of satisfaction and across all levels of financial health: strong advice is delivered frequently; includes high-quality content; is relevant and personalized to the customer; clearly provides a call to action; and conveys concern for customer’s needs.
• Most customers don’t remember receiving advice: While successfully delivered financial advice is consistent with significant gains in customer satisfaction, nearly two-thirds (62%) of bank customers do not recall receiving financial advice from their bank in the past year.
• Successful advice strategies leverage multichannel customer engagement: The highest performers both in financial advice customer satisfaction and in customer recall merge branch-based experiences with a strong digital presence to reinforce in-person interactions. Virtual assistants and personal financial management tools can help.
• Different messages required for different customers: Although overall satisfaction with financial advice has increased year over year, many banks have struggled with successfully delivering financial advice to those in all customer segments. While some banks have connected better with financially healthy customers, others have connected better with financially unhealthy customers. Just three banks—Bank of America, Chase and Wells Fargo—have managed to significantly improve on advice satisfaction in both customer segments.