March 1, 2017
-American Bankers Association
Banks have steadily won back customer trust since the financial crisis, but that trust could be endangered by sales pressure that isn’t based on the customer’s best interest, according to a new study by J.D. Power. Banks are now reporting record levels of customer satisfaction, and approximately 8 in 10 consumers say that their banks act in their best interest, that they trust their banks to do the right thing and that their banks act ethically.
The study found that high-pressure sales tactics and unexpected new accounts or fees reduced trust and increased the likelihood of switching. Although rare, more customers over time reported being pressured to adopt a product they did not want or need — 11 percent in 2015 versus 3 percent in 2011. Eight percent said they avoided going to branches because of the sales pressure.
The study also showed that 14 percent of customers said they have had accounts opened or funds transferred without their knowledge. Digging into these responses, J.D. Power found that these customers reported one of three experiences: simple and easily corrected errors, such as a typo in a Social Security number; identity theft or fraud by another customer, such as an ex-spouse in a divorce case; or unauthorized account openings by bank staff.
While the overall number of customers affected by these incidents is small, they are much less satisfied. More than half of those who had an unauthorized account or fund transfer or unexpected fees said they will definitely or probably switch banks in the next year — versus just 6 percent overall.
But banks did not need to eliminate sales pitches for customers to report satisfaction. Customers reported high levels of satisfaction when they received financial advice and product pitches, provided they also felt that bank staff had thoroughly identified customers’ needs and tailored promotions to those needs. More than 8 in 10 customers in this category said they would definitely continue to use their bank.
ABA’s Center for Regulatory Compliance recently released a Sales Practices and Incentive Compensation Assessment Matrix to help member banks assess and manage risks posed by their sales practices and incentive compensation programs.