Dive Brief:
- American Express and Discover Financial Services received top marks when it comes to customer satisfaction among direct banks, according to J.D. Power’s 2022 U.S. Direct Banking Satisfaction Study, released Thursday. Both of those card companies also hold bank licenses. A direct bank is a digital alternative to a retail bank that doesn’t operate physical branches.
- Discover and Charles Schwab tied for the highest ranking in overall satisfaction among checking providers; both scored a 715 on a 1,000 point scale. Ally Bank ranked third at 709.
- Among savings providers, AmEx edged out Discover: AmEx ranked highest in overall satisfaction, with a score of 718, and Discover ranked a close second at 717. Charles Schwab Bank ranked third with a score of 713.
Dive Insight:
From shopping to bill paying, consumers conduct more business online than ever, and direct banks have become increasingly popular: More than one-quarter of banking customers in the U.S. use an online-only bank, according to J.D. Power.
“As so much of our lives continue to shift to digitally based providers, direct banks have been in prime position to gain market share and mindshare by delivering around-the-clock access, along with products that have attractive fee structures and interest rates,” said Paul McAdam, senior director of banking and payments intelligence at J.D. Power, in a news release.
About 59% of direct bank checking account customers and 64% of direct bank savings customers give those experiences a “perfect” or “excellent” grade. Nearly 9 in 10 checking and savings customers said their direct bank is easy to do business with and 85% said their accounts don’t have hidden fees, per J.D. Power.
In the savings category, New York-based American Express received high marks for customers’ ability to grow and move money, J.D. Power found. Riverwoods, Illinois-based Discover dominates when it comes to digital management of savings funds. Ally Bank ranked fourth in the savings category but led the pack in helping customers reduce fees.
Although Discover and Charles Schwab Bank tied in the checking ranking, Discover came out on top regarding customer service, managing an account through the mobile app and customers' evaluation of whether their account helps grow their money.
In April, Discover revamped its cash-back debit product, which isn’t limited to credit cardholders. The company added early access to paychecks as an account benefit. During the company’s first quarter earnings call, CEO Roger Hochschild said the product is expected to become “a key part of our business” over time.
AmEx has pushed even further into banking territory this year with the introduction of an all-digital checking account for its cardholders. AmEx CEO Stephen Squeri said in March that the increased use of digital services means brick-and-mortar locations are no longer essential to making deposits.
Between two waves in fall 2021 and early 2022, J.D. Power collected 3,664 customer evaluations of checking accounts and 6,282 evaluations of savings accounts.
J.D. Power also sought customer input on neobanks, but those entities were not eligible for satisfaction awards because they don’t have federal bank charters. Neobanks continue to grow their customer bases — especially among younger, less financially secure consumers who are more sensitive to bank fees — but satisfaction with neobanks varies, J.D. Power said.
