Customer experience (CX) leaders grow revenue faster than CX laggards, driving higher brand preference and loyalty, and can charge more for their products.
How well do banks earn loyalty with the quality of their customer experience?
Forrester’s Customer Experience Index (CX Index™) methodology measures how well a brand’s customer experience strengthens the loyalty of its customers so it can reap these benefits. In 2022, we used this methodology to benchmark CX quality at 221 US brands, including 26 banking brands. This year, we found that:
- Customer trust in banks fell for the first time since 2018. This year, we observed the first decline in banking customers’ trust in four years. In 2021, trust in banking brands reached an all-time high, but in 2022, both direct banks’ and multichannel banks’ trust scores fell by a statistically significant 2 percentage points each.
- CX quality stalled for direct banks and dropped for multichannel banks. The score for CX quality at direct banks remained flat on average in 2022 at 72.5 — continuing the trend of stagnation we’ve seen since 2019. On the other hand, multichannel banks scored 74.1, declining on average for the second year. While many direct and multichannel bank customers think their experience is excellent, more than one-third still believe the experience is either poor or very poor.
- NFCU and USAA continued their reign with improved scores. Navy Federal Credit Union (NFCU) and USAA have been the top two US banking brands for the past seven years. Even without their modest score increases this year, the two brands would still have remained atop the CX Index. Both brands are the strongest among their peers across all CX driver categories and are the only two banks to make it into the CX-elite brands (top 5% of US brands in all industries).
- Emotion is more important than ease or effectiveness. Emotion — how customers feel about their experience — has a bigger effect on customer loyalty than the ease or effectiveness of the experience. Unfortunately, banks perform poorly on emotion. Feeling valued drives loyalty the most in both direct and multichannel banking in the US. Among direct banking customers who feel valued, 87% plan to stay with the brand, and similar percentages plan to purchase more from the brand and advocate for the brand. For multichannel banking customers, the numbers are even better.
- Banking customers prefer hybrid experiences. Conventional wisdom states that customers prefer digital experiences. As a result, many banks are racing to create entirely digital experiences to entice customers away from physical channels like call centers and brick-and-mortar locations. But our data reveals that this strategy may fail, because hybrid CX outperforms both purely digital and purely physical experiences. One bank that appears to understand this is U.S. Bank, which is investing in a range of “do it together” tools that combine the power of digital and human experiences to meet customers’ needs in the way that works best for the customer.
Why does all this matter?
Improving CX goes straight to the bottom line. For a large multichannel bank, a 1-point improvement in its CX Index score can lead to an incremental $123 million in revenue. For a direct bank, it can lead to an incremental $92 million in revenue. Additionally, the effect of CX changes on business outcomes for US banks is exponential — i.e., revenue growth from better CX gets progressively larger, such that US banks have the highest gains from improving already good or excellent experiences.
To learn more about the specific drivers of a great customer experience for banking, and more detailed analysis of the results, check out Forrester’s The US Banking Customer Experience Index, 2022 report and webinar.