Big Bank Lead In Customer Satisfaction Driven By Digital Investments
The largest banks which have traditionally trailed small and mid-size banks in customer satisfaction have suddenly taken the lead, writes Jim Marous of the Financial Brand. Rocky Clancy, vice president of the financial services practice at J.D. Power, tells Marous that "this improvement could be the result of significant focus and investment by the larger banks on all digital and non-digital components that combine for an improved customer experience.” According to the 2016 U.S. Retail Banking Customer Satisfaction Study published by J.D. Power, the appeal of big banks has largely been with Millennials, emerging affluent and minority customers.
Increases in big bank customer satisfaction have been driven by digital investment, with these institutions carrying the highest scores in online satisfaction (839), mobile (858) and ATM (841) interactions. In the meantime, regional and mid-sized banks have struggled to keep pace, as their online, mobile and ATM satisfaction levels have fallen.
Banking's New Patent War
Big banks like Bank of America and payments networks such as MasterCard are applying for more patents than ever before as they try to ward off fintech competition. Banks and payments companies were awarded 1192 patents over the last three years, a 36 percent uptick according to researcher Envision IP. The big banks are also "hosting seminars for the U.S. patent office to head off what the industry sees as bad patents that cover age-old banking practices," reports Bloomberg. Bank of America has won the most patents among U.S. banks recently, with a portfolio of 3,000 touching blockchains, wearable financial indicators and ATMs operated by smartphone. MasterCard applied for 10 times as many patents in 2015 as it did in 2010.
Banking Apps Suffer By Mass Market Comparison
The unique experiences that consumers are having with non-financial apps like Uber and Seamless are part of the reason bank apps have been greeted so enthusiastically. Instead of being measured against one another, banks are finding that "service industries and small startups are setting new expectations about digital experiences," writes Gordon Hui for American Banker. Hui advises financial services companies to elevate their mobile experiences by being timely (offering services like click-to-chat for an instant conversation with the customer), delivering hyper-customization and personalizing in real-time. "While some credit cards have started to take advantage of location offers, the level of personalization needs to more substantially combine information from the phone with data about spending and investing habits, such as 'I buy a lot of shoes' or 'I have a mortgage'," writes Hui.
Investors Pressure French Banks To Cut Branches
French banks are facing mounting pressure to trim their branch networks and move customers onto digital platforms. Last year Society Generale promised to close 20 percent of its branches by 2020 and investors are now urging rival banks to follow suit. “The SocGen announcement created some excitement. Anything by the other banks to better use capital and cut costs will be warmly welcomed by investors," JPMorgan analyst Delphine Lee told the Financial Times. Banks in France have only eliminated 3 percent of branches since 2010, compared with 13 percent across the rest of Europe. This has led to high cost-to-income ratios in French retail banking.
BBVA Ventures Gives Way To Propel Venture Partners
BBVA is changing its approach to investing in fintech startups, as the Spanish bank will shut down its in-house venture arm, BBVA Ventures, and place its portfolio and another $150 million into a new VC, Propel Venture Partners. Based in San Francisco and London, Propel will focus on payments, credit, insurance, wealth management, e-commerce, security and compliance, reports TechCrunch. BBVA's investments in Prosper, Personal Capital and Taulia have been joined by an investment in a new lending startup called Earnest.