Dive Brief:
- Online banks and fintechs are winning over younger consumers, achieving the highest rates of checking account customer satisfaction among both millennials and Gen Z, according to a JD Power survey of more than 23,000 U.S. adults released last week.
- Among millennials, the average overall satisfaction score for online banks and fintechs is 699 on a 1,000-point scale, while average overall satisfaction for national banks trails at 672. For Gen Z customers, overall satisfaction for online banks and fintechs outpaces that of national banks and retail banks at 701.
- “A lot of it really does start with the idea that the fintechs are protecting their customers from fees, helping customers to protect their money,” Paul McAdam, senior director of financial services at JD Power, told CX Dive.
Dive Insight:
With customer satisfaction comes growth. Millennials and Gen Z are not only more satisfied with online banks and fintechs, but they’re trusting them with their money.
Online banks and fintechs account for 20% of the existing primary checking relationships among millennials and Gen Z, but that number is growing: 28% of this cohort’s newly opened checking accounts are at online banks and fintechs.
Banks and fintechs are keen to capture business from millennials and Gen Z.
“These two customer segments are really instrumental to growth for a bank, for a fintech,” McAdam said. “Two-thirds of all the new primary accounts — the ones that everybody wants — are coming from these two segments.”
Among millennials, American Express, SoFi and Chime rank highest in customer satisfaction, while OnePay and SoFi rank highest in customer satisfaction among Gen Z.
Fintechs and online banks saw high satisfaction in areas such as fee fairness, real-time account visibility and proactive communication.
“The fintechs largely have no fees,” McAdam said. “Most of them don't allow the customer to overdraft. And what they've really been able to successfully do is they've just reframed the whole conversation around fee avoidance.”
JD Power also found that younger customers were more satisfied with online banks and fintech’s real-time account visibility.
Among that cohort, 85% said their account balances update immediately or within hours in comparison to 70% at traditional banks. In this type of benching marking studying, that gap is a big deal, McAdam said.
These online banks and fintechs are doing better at offering financial services tools that these younger customers want — everything from credit score insights and helping customers build credit to helping customers manage their subscriptions and recurring payments.
“Plenty of the big banks are doing these things,” McAdam said. “But when you take things on average and put the two peer groups next to each other, these younger customers are definitely telling us that they're using these tools more at the online banks and fintechs.”
These tools are key satisfaction drivers, McAdam said. “They help build the sense that the checking account is helping them to make financial progress.”
