Digital only banking. Photo: Shutterstock.

Digital-only banks are beating credit unions, community banks and traditional banks in customer satisfaction, new data from FIS showed.

According to the survey of 1,749 U.S. consumers, 63% of customers at so-called direct-to-consumer banks, which are typically digital-only financial institutions, said they were “extremely satisfied,” compared to 52% of credit union members, 38% of community bank customers, 27% of regional bank customers and 19% of top 50 global bank customers.

Widening the satisfaction measures showed that digital-only FIs are running neck-and-neck with credit unions, however. According to the survey, 90% of customers at digital-only banks and 90% of credit union members said they were “extremely satisfied” or “very satisfied.” That compared to 84% at community banks, 73% at regional banks and 66% of customers at top 50 global banks.

The survey also found that almost three-quarters (73%) of consumer banking interactions were done via mobile or online, reflecting the growing importance of digital ease of use for consumers.

“While security and trustworthiness continue to be critical attributes, more consumers are choosing their banking providers on the basis of a convenient, frictionless digital experience,” FIS co-COO Bruce Lowthers said. “For banks and credit unions of all sizes, these survey results reinforce the importance of modernizing every touch point of their customer journeys.”

Millennials were particularly interested in digital self-service, the study found. In fact, only 45% of the millennials said they trusted banks more than fintech companies.

“Millennials’ satisfaction with community banks dropped by nearly half from 2018 levels, indicating that these institutions are not meeting the digital needs of younger generations,” the report said.

That could have a significant influence on member attraction and retention, FIS noted.

“When it comes to winning over the youngest of viable banking customers, those between 18 and 26 in age, it’s all about who you know,” it said. “Young millennials are especially appreciative of peer and family recommendations and rarely shop around for banking services. Banks and credit unions have a clear opportunity to use their existing relationships with parents, siblings, and friends, who can usher young customers into new bank accounts with a trusted institution.”

FIS also found that:

  • 75% of young millennials were referred to their primary bank.
  • 19% of young millennials used credit unions; 39% used the top 50 global banks, 23% used regional banks and 9% used community banks.
  • Senior millennials (age 27-37) checked their account balances via mobile 11.02 times per month.
  • 71% of senior millennials chose a nonbanking provider because online and mobile use was easy.
  • 51% of Gen Xers used a non-bank P2P app in the last 12 months, and 25% used mobile wallets.
  • 49% of baby boomers used mobile banking channels in the last 30 days.