TROY, Mich.—With the holidays here and consumers’ finances strained from increased spending, a new study reveals the nation’s banks are not offering the services their customers need to help them through challenging financial times.
According to J.D. Power data, 20% of customers in a new study say their bank does not offer any emergency services to support them during tough times, while only 36% feel completely confident that their bank provides financial education resources to help them manage their finances effectively.
“With customers stretching their spending to meet the demands of the season, this puts the onus on banks to boost awareness around their emergency products to give their clients some peace of mind,” J.D. Power said.
Financial Health Remains Stagnant
The number of customers who are financially healthy decreased slightly in November to 31%, while 44% of bank customers fall into the vulnerable category. These levels have remained largely consistent for the bulk of 2024, J.D. Power said.
The number of bank customers who say the cost of goods is increasing faster than their income actually dropped slightly to 65%. Overextended customers saw a slight increase to 53%, while stressed customers dropped to 80% from 83%.
Bank Backup?
“Amid this period of widespread economic uncertainty, it seems that many banks have struggled to instill confidence in their customers. Just 35% of customers say that their bank will completely help protect them against economic fluctuations, while 17% said banks will not protect them at all. Financially vulnerable customers and those over 40 years old were least likely to agree that banks would protect them,” J.D. Power said.
To address concerns like these, many banks and financial institutions have introduced emergency support services, such as payment assistance programs. However, only 33% of bank customers completely agree that their banks offer emergency support services, such as micro-loans, lines of credit and fee waivers, while 20% say their bank does not offer any help at all.
“Customers are also dismissive of the notion that their banks empower them to meet life’s financial challenges. Just 31% completely agree that banks empower them, while 12% said not at all. More than half (57%) say somewhat, which implies there are customers in the middle that can be won over,” J.D. Power said
The Battle for Trust
If banks made an impression on customers during the era of 7% inflation, it certainly fails to resonate today, J.D. Power emphasized.
“Many institutions built out huge awareness campaigns around emergency support services like fee waivers, but it’s clear that not all customers received the message. That means that banks need to go the extra mile now to win the hearts and minds they failed to on the first go-round,” J.D. Power said.
No matter the economic conditions, customers’ financial health can ebb and flow throughout the year, and regardless of what the economic headlines say about topline inflation and economic recovery, many customers are still struggling with financial health, J.D. Power noted.
“If banks can show the same kind of investment in helping customers out in an emergency before another tough stretch happens, it may resonate more than when customers are simply trying to keep their heads above water,” the company said.