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More U.S. consumers are now considered financially vulnerable, while one-third of retail bank customers want – but have not received – information from their bank on how to handle inflation, according to a new report from J.D. Power.
A survey of U.S. retail bank customers found that only 30 percent are considered financially healthy. J.D. Power said the share of customers considered financially unhealthy has reached a new high in its annual analysis of retail bank customers, with 45 percent classified as vulnerable, 13 percent as stressed and 11 percent as overextended.
Consumer financial health is measured by combining spending and savings ratio, creditworthiness, and safety net items like insurance coverage, J.D. Power said on its website, with consumers placed on a continuum from healthy to vulnerable.
J.D. Power’s survey as part of its Banking and Payments Intelligence Report was conducted in July and included responses from 4,000 retail bank customers nationwide.
Most customers – 81 percent – said support from their bank was important in helping them manage how to live with high inflation. Among financially overextended customers, 91 percent said a bank’s support was important.
Some customers have received help from banks. When asked whether banks had reached out with information on how to handle inflation, 31 percent said they had received some form of communication. But another 31 percent said they had not received any information from their bank, but wished they had. J.D. Power described this as “seemingly a missed opportunity for banks to build a valuable relationship with their customers.”
The survey also showed that some customers have paid closer attention to retail banks’ track records on environmental, social and governance issues.
“While ESG initiatives may not be the determining factor for most, there has clearly been a shift in how banking customers view their financial institutions,” J.D. Power said. “Americans no longer want their banks to have a passive role in their finances, nor do they want to be tied to corporations that are disengaged from their communities. And that creates a huge opportunity.”
The survey found that 20 percent of respondents have left their bank because of its corporate social governance policies, and 16 percent have left a credit card issuer for those reasons.
“If banks are going to play a role in helping their customers confront the growing challenges Americans face in this economy, they’ll need to understand what their customers value,” J.D. Power said. “Reaching out with pertinent debt-management information – even if it’s not acted on by the customer – or making sure they communicate a strong social agenda, can be just as important as a new product offering or fintech innovation.”
