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Sitting Down with Novantas | Bob Neuhaus

Bob Neuhaus, Banking & Payments Practice Lead at J.D. Power

Bob Neuhaus is a banking and payments practice lead at J.D. Power, where he oversees syndicated and proprietary studies in the industry. As part of his role, Mr. Neuhaus spends time analyzing customer satisfaction and the ability of banks to provide appropriate services and features.

Here are his thoughts on the current state of the industry.

Q: How do regional and midsize banks perform in customer satisfaction compared with national banks?

A: At a high level, nationals have lower satisfaction than the regionals and mid-sized banks, but they’re closing the gap. There’s a lot of nuance there. Banks are still dealing with trust issues coming from the 2008 financial crisis; trust has moved from a negative level to a neutral level. When you compare them to other industries, they’re still at the bottom. “Neutral” is not OK when it comes to trust. The big banks are struggling when it comes to satisfaction overall, but they will figure it out.

…nationals have lower satisfaction than the regionals and mid-sized banks, but they’re closing the gap.

Q: What are some of the distinctions in terms of performance?

A: Nationals have higher average deposits and more products per household — 3.1 versus 2.5. Credit cards are a particular strength, with all the data that it includes. I am surprised that national banks aren’t doing enough to turn that into an advantage with their customers. A lot of customers would give specific permissions if there was an advantage to them, such as finding out if there is another card that would be beneficial to them based on their data.

The midsize banks will really struggle to catch up. They rely on third-party providers to power their apps, so they have less control over their destiny and the mobile experience.

Higher digital adoption at national bank is a cost advantage. The percentage of customers who are digitally-centric is nearly twice the level at the nationals than at the midsize banks. And branch traffic for national banks is 25-40% lower than the regionals, which puts pressure on scarce high-touch resources. The big banks are also winning with the younger customers in terms of convenience and self-service. That doesn’t bode well if your customer base is aging. The regionals and midsize banks have older customers. The life of that model is not going to last forever.

Q: How can banks improve customer satisfaction in 2020?

A: High-touch resources are essentially finite, so the key is how to allocate them. The regional and midsize banks have to help their customers become more digital in their interactions. The digital model today is focused on tools and support transactions. That has become table stakes. The banks have to figure out how to add value to the individual customer. It must be tangible. One way is to focus on the financial health of customers.
A lot of attention is being paid to onboarding which is inconsistent. Onboarding is the most critical time in the life of a customer because you are setting them up with the right products in different channels. There is also a need for re-boarding for the customer who has been with you for a while. You need to reach out to them and re-engage with them. It shouldn’t be the customer’s responsibility.

Q: Are banks doing enough to measure customer satisfaction?

A: The banks are concerned about customer satisfaction and they’re doing a lot to measure it. It’s positive when you survey customers because it signals that you are open to feedback. But the approach is lacking. In an ideal world, the bank should know the current satisfaction of every customer and have a clear understanding of what is needed to improve the satisfaction. They need to create a model where I can provide feedback on my schedule and not on surveys that may interrupt the day. When you use Lyft or Uber, you rate the driver every time. I think that’s a great model for banking.

The current measurement system focuses on providing service that is “good enough” rather than being focused on how to provide exceptional service. If you are focused on exceptional service, you will change the way you ask the questions and ask them in a different way. Often the scores look good enough and then the bank moves on.

Q: What are some common pitfalls that banks run into with digital-centric customers?

A: Our research shows that the digital customers’ understanding of fees and benefits is much lower than other customers. We hit them with disclosure statements and legal agreements and no one reads those things. I clicked on the disclosure documents on my checking account and got a 39-page document on my phone in unreadable font. My only choice was to print it out on my printer. Banks have a responsibility to create an experience that is worth the customer’s while. The banks can be taking advantage of data they have on the customer to get a better conversation going. They need to integrate behavioral data with attitudinal data. A survey alone doesn’t tell you what’s going on.

The percentage of customers who are digitally-centric is nearly twice the level at the nationals than at the midsize banks.

Q: How can banks improve engagement with digital customers?

A: Direct banks do it. The net promoter score (NPS) for direct banks is 62, which is double that of retail banking at 29. Regionals and midsize have fallen behind on channel adoption. Banks have to get customers to use the basics — checking balances, making deposits, moving money. They have to guide them to the next best feature, such as alerts and budget analytics tools. The banks need to be moving from pure self-service to more predictive service, like telling the customer that they are in the wrong account or we can help you save money on your mortgage. Use the data to help customers save money and make their lives simpler.

Q: Your research found that 58% of customers want to receive advice through digital channels, but only 14% received their most recent advice that way. Why are banks so hesitant to adopt this?

A: The bank has to understand the needs of the customer and the customer has to be willing to share their needs. Not every customer wants it, but for those who want it, there has to be a mechanism. It has to be seamless across channels. The customer’s information has to be put in the context of their full financial picture. It is common to use multiple banks, so that means data from one bank could be completely out of context.

Banks have to be willing to recommend something that is in the customers’ best interest, but may reduce revenue for the bank. That is a pretty rare situation. But it’s time to shift gears. Younger customers are clamoring for advice.

Q: You mentioned earlier that digital customers have a harder time understanding fees and benefits. Why is this so?

A: Look at my example of the 39-page checking-account disclosure. The way the information is conveyed is not very consumable. If I have to click levels down and then find a nine-page document, that’s not an effective way to communicate. If I’m in a branch and someone can walk me through it, that’s more effective. The information needs to be fed to digital customers in a way that is more intelligible. For example, gamification to make it fun to learn this stuff. Banks need to tee up the information in a way that is appropriate.

Q: Your research found that less than one-third of U.S. banking customers who use a mobile app are “delighted” by the experience. How can banks make this better?

A: To delight customers, you have to be predictive. Provide additional value to me before I’ve thought of it, focus on issues of my financial health and financial literacy. Make sure customers can complete tasks within the app. Don’t have them go halfway there and have to contact another channel. That is still a major challenge. Digital containment is the ability to complete the task within the digital channel. If you’re in the app and have to contact the contact center and are put on hold, that completely undermines the delight of the digital experience. And banks have to bring customers up to speed about new features and functionality. I have signed up for financial apps, never used them and never heard from the bank.

…when’s the last time I actually needed to go to a branch? It’s been years.

Q: “Sitting Down” always ends this segment with a question about personal banking habits? Tell us yours.

A: I use a number of different providers, which can be frustrating to try to get the right blend of products and personal assistance. I have found that taking advantage of alerts is a great feature. If I get the same amount charged on my credit card twice, they send an alert asking if it’s correct. The notion of alerts creates customer intimacy which is part of building trust.

I go to branches a lot because of the business I’m in, but when’s the last time I actually needed to go to a branch? It’s been years.


Robin Sidel
Director, New York

For more information, contact Novantas Marketing

+1 (212) 953-4444

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