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Retail Banks Are Missing Opportunities to Give Digital Financial Advice

Most bank customers want financial advice from their bank but digital guidance from institutions is lacking, according to a J.D. Power study.

Retail banks are missing out on opportunities to give customers financial advice—whether it be on saving, retirement or investments—because they aren’t offering digital guidance on those topics.

Most customers who received face-to-face financial advice from their retail bank felt their needs were completely met (58 percent), but satisfaction drops when advice is delivered by other means, according to J.D. Power's 2018 U.S. Retail Banking Sales Practices & Advice Study. Only 45 percent of customers who received digital advice through their bank’s website or mobile app felt their needs were met and only 33 percent felt their needs were met via email.

The majority of customers surveyed for the study (58 percent) said they want to receive advice through their bank’s website and mobile app, but only 12 percent said they received advice in that manner.

“More than any other channel … [digital advice] is where clients really want to receive this information,” said Paul McAdam, senior director of the banking practice at J.D. Power. “To me, that was a key.”

The survey found customers are seeking advice on a number of topics from their retail bank, too, not just on savings accounts or loans.

Quick financial tips was the top piece of advice customers sought from their retail bank (41 percent), followed by investment-related advice (39 percent) and retirement-related advice (35 percent). Spending, budgeting and saving for a large purchase were other subjects they wanted help with from their bank.

While many banks offer traditional wealth management services and advisors who help clients make investment decisions, those services are typically reserved for only the richest customers. McAdam said digital advice, for example, in the form of savings tips or a robo advisor, can help customers who don’t qualify for the traditional advisory services.

The largest retail banks also have “strong incumbency advantages” over technology companies when it comes to digital offerings, according to McAdam. In the context of retail bank customers, third-party services like Mint or robo advisors have low penetration. But McAdam said mobile banking adoption is now at 52 percent, so an existing customer base is already in place for those digital offerings. 

Younger customers in particular log in more often and the opportunity to “give personalized advice that is always on, so to speak,” McAdam said.

The study surveyed 3,841 retail bank customers in the U.S. who received any advice from their primary bank regarding relevant products and services or other financial needs in the past 12 months. Customers were from 17 large U.S. retail banks and surveyed at the end of 2017.

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