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November 18, 2020

Super regional banks struggling with identity crisis

David Vanamburg

The banking industry has seen better days.

After slipping 1.2% last year, customer satisfaction with banks overall slides even further, dropping 2.5% to an ACSI score of 78, per our latest Finance, Insurance, and Health Care Report. This marks the first time since 2015 that satisfaction with banks resides in the 70s.

In 2020, no one escapes the swell of dissatisfaction, which has washed over national, super regional, and the smaller regional and community banks, and nearly every brand within those categories.

Yet, while the decline is industrywide, one category takes the brunt of the punishment: super regional banks.

Considerable satisfaction drops for super regional banks across the board

In 2019, national banks and super regional banks both had an ACSI score of 78, with the former lagging in six of 12 customer experience benchmarks. This year, much has changed.

As big banks decline 2.6% to a score of 76, super regional banks plunge 3.8% to a category-low 75. They also now trail both national players and smaller banks in every element except ATMs and branches, where they only outshine smaller banks – 73 to 70 and 73 to 64, respectively.

For super regionals, both staff courtesy (82) and in-branch transaction speed (80) decrease 5% year over year. By comparison, big banks and community banks decline just 1%-2% for these elements. Similarly, call center performance (74) for super regionals drops 6%, while large and small banks experience 1% and 2% dips, respectively.

Super regional banks also undergo substantial declines year over year in mobile app quality (down 4% to 81), website satisfaction (down 4% to 81), ease of understanding account information (down 4% to 78), variety of available services (down 4% to 78), and ease of making changes to accounts (down 5% to 77).

Super regionals don’t know where they belong

National banks have the power and money to go full steam ahead into digital services. The smaller banks have the personal touch that creates a quality in-person experience. Where does this leave super regional banks? They’re trying to figure that out themselves.

Not quite big enough to have the resources of larger banks, but not intimate enough to warrant the close connections to the community that smaller firms have created, super regionals could be having a difficult time finding the right balance of digital and human resources that customers want.

KeyBank, for example, faces this very problem. It’s considered by some to be too small to compete with the mega banks, yet too big to give off that community feel. It makes sense that it’s at the bottom of the super regional category, down 5% to a score of 72.

So, if you’re one of these super regional banks, what can you do? If you’re BB&T and SunTrust, you can go the merger route. Of course, while this “merger of equals” will make the newly formed Truist, the nation’s sixth largest bank, our studies have shown that mergers hamper customer satisfaction in the short term.

Walking a fine line

As super regional banks struggle with an identity crisis, the opposite can be said for the regional and community institutions.

Despite dropping 2.4% year over year, these banks still top the industry with an ACSI score of 81. Customers continue to appreciate the personal care they receive from these institutions, as regional and community branches are significantly better than their competitors in courtesy (87), speed of transactions (86), variety of financial services (83), ease of understanding information about accounts (83), and ease of making changes to accounts (83).

Surprisingly, the smaller banks are outperforming both national and super regional banks in digital services as well. They lead the industry in mobile app quality (86) and reliability (85), website satisfaction (85), and call center satisfaction (82).

It comes down to knowing who your customers are and what matters most to them. Smaller institutions, even with slight satisfaction declines, have this covered. Super regional banks, not so much. And with customers already frustrated with the banking industry as it is, these institutions have little room for error.

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