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Digital transformations are happening everywhere as companies of all sizes across the globe contend with the changing nature of using new technology to deliver value to customers. What started simply enough as a new way of interacting with customers through the internet and mobile devices has evolved into a full-fledged business mandate to grow stronger, faster, and more efficient by building personalized customer experiences powered by data intelligence. Too often, though, “digital transformation” itself can feel like a buzzword, as companies rush to streamline operational efficiency and impress end users with slick new interfaces, without a focused approach to the real challenge at hand: How to deliver superior customer experiences in the digital age.
Exploring the Digital Dilemma in the Retail Banking Sector
At J.D Power, we’ve observed a trend we call the “digital dilemma,” whereby companies make tech-focused investments only to find that those investments often impede their ability to connect with customers. One example comes from the retail banking sector, which spent roughly $20.2 billion last year on hardware, software, services, and internal IT staff to develop digital transformation initiatives, according to IDC. To some extent, the investment worked. According to our 2018 U.S. Retail Banking Satisfaction Study, 28% of the patrons of retail banks are digital-only customers. Banks are succeeding in moving their customers from costlier branch-based interaction channels to more cost-effective digital channels.
Unfortunately, that digital growth is coming at the expense of customer satisfaction. When we looked at customer satisfaction scores across all retail bank customer profiles, we found that digital-only customers had the lowest scores. Now, a skeptic might read that and think that we may have only factored the opinions of less technically inclined users into our analysis. It’s easy to assume that smartphone-attached digital natives, such as millennial users, would be the first to forsake the in-person banking experience, right? Wrong. Surprisingly, the gap in satisfaction between digital-only and branch-centric bank customers is largest among millennials.