Annual ranking of institutions, revamped to measure customers’ financial health, reveals gains from advice and guidance
For Canadian retail banks that want to score big on customer satisfaction, delivering financial advice to customers in dire need of it can be key to success, according to a new survey from J.D. Power.
In its 2021 Canada Retail Banking Advice Satisfaction Study, which measures overall customer satisfaction on a 1,000-point scale, J.D. Power found that offering customers advice or guidance that fully meets their needs can lead to a gain of as much as 235 points. Banks are able to achieve that 51% of the time, and 74% of customers who get advice from banks act on it.
“Delivering targeted, personalized financial advice is a win-win for retail banks and their customers because it increases utilization of services and improves customer satisfaction along the way,” said Paul McAdam, senior director of banking intelligence at J.D. Power.
Aside from measuring Canadian retail banking customers’ satisfaction with the advice and guidance they get, the fourth edition of the survey was also revamped to include measures of personal financial health and literacy.
Concerningly, just 39% of retail bank customers were categorized as financially healthy. Another 36% were classified as vulnerable, while 13% were stressed, and 12% were overextended. Only 42% of the retail bank customers surveyed could pass a basic financial literacy test, four percentage points more than U.S. retail bank customers.
In spite of their need for financial advice and guidance, only 19% of retail bank customers said they are “very interested” in getting it, and 26% said they’re “not at all interested” in receiving it from their bank. Based on the survey, bank customers are more likely to get their financial advice or guidance from family members or the internet.
Still, it might simply be a case of people not knowing what they’re missing. The survey found that customers’ needs are met more often when they get advice from a licensed rep (69%), a branch rep (63%) or a loan or mortgage specialist (59%).
“There is a huge opportunity for retail banks to forge closer relationships by helping customers with things like advice on investment and retirement planning, as well as providing quick tips and information to help them improve their financial situation or stick to a budget,” McAdam said.
