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Differentiation in Digital: How Asset Managers Can Stand Out Beyond Performance Metrics

Traditionally asset and fund manager marketing and sales messaging focuses strictly on financial performance. But there is a problem with that.

If everyone is talking about the same thing then why should your audience pay attention to you vs. all of your competition.

The Boston University Questrom School of Business recently hosted a conference where industry leaders gathered to discuss the evolving landscape of marketing and digital experience in the asset management space.

At the event, Craig Martin, Executive Managing Director of Wealth Intelligence at JD Power and Jim Cove Chief Marketing Officer of Natixis examined the importance of differentiation, trust, and firm credibility in the rapidly evolving digital environment.

A critical question for the market – how can asset managers effectively differentiate themselves through digital experiences?

Going Beyond Just Performance

Having a point of differentiation is critical to future success in the asset management space and digital is a vital channel to communicate and reinforce what is unique about the asset manager.

• While solid investment returns are vital, they are also expected. Beyond that, Advisors are seeking a partner who helps them improve their business.   
• Among financial advisors who rated their level of trust with an Asset Management partner as one of the highest among their partners, 80% said they were ‘very likely’ to invest with the firm in the future vs. just 15% for those who rated their level of trust average or below.
• Another key trait financial advisors are seeking in a partner is being ‘easy to do business with’. 79% of advisors who give asset management partners top marks on this brand perception said they were ‘very likely’ to invest with the firm in the future vs. just 19% for those who rated their level of trust average or below.

Effective digital strategies that balance all three elements –The Digital Experience Hierarchy.

The Digital Experience Hierarchy

The Digital Experience Hierarchy is a strategic framework measures the effectiveness of investors’  engagement with firms’ digital assets aligning it with investors’ satisfaction, retention, and overall business growth. This hierarchy consists of three levels: Foundational, Findable, and Valuable Elements.

Analysis of 2,500 site evaluations by Financial Advisors who used the asset manager site in the last month, JD Power has discovered that nearly half of experiences do not achieve the “foundational” aspects.

1. Foundational: provides content  and tools that increase product knowledge​ and has useful investment insights and education ​
2. Findable: Easy to navigate and ability to find important content​
3. Valuable: Aesthetically modern while reflecting the brand, is well organized, fast and responsive.

Trust: The Digital Frontier

A poor digital strategy can quickly erode trust, impacting perceptions both now and in the future. Trust isn’t built overnight. Consistent, transparent communication through digital channels can significantly enhance trust which is a critical factor in the decisions Advisors make when it comes to where to invest and who they partner with in the future.

A great digital experience is about understanding the ‘why’ of the end user and ensuring your digital experiences efficiently and effectively enable the end-user to achieve their goals for the site.  No matter how good your content, if it’s difficult to find and engage with then its value is minimized or totally lost. 

About the Author: Craig Martin, the Executive Managing Director of the Wealth and Lending Practice at JD Power, leads data analysis and thought leadership for Auto Finance, Consumer Lending, and Wealth Management industries, driving positive change and superior business outcomes. His insights, featured in numerous publications, address customer experience, satisfaction, and industry challenges.

VIDEO: June 2024 Financial Services Update

By embracing innovation and prioritizing personalized experiences, banks and credit card providers can redefine their role in enhancing financial well-being. We unpack the latest insights from the 2024 U.S. Retail Banking Advice Satisfaction Study in the June 2024 JD Power Financial Services Intelligence.

Here are some key insights that you can’t miss:

• Youthful Engagement: Younger consumers (<40) are actively seeking personalized financial advice. While they act on the advice received, satisfaction levels indicate room for improvement. Delivering robust tools and services alongside advice is crucial.
• Industry Standard Setters: Leaders like Citi, Bank of America, Chase, and American Express set benchmarks with proactive financial guidance, defining satisfaction norms.
• Frequency Optimization: Increasing interaction frequency across digital and traditional channels enhances satisfaction, engagement, and loyalty. A multichannel approach ensures comprehensive service accessibility.

Watch the full video for impactful insights on how improving customers’ financial health impacts loyalty and advocacy.

Bonus Content: Financial Health Personas

Understand the different groupings that Jennifer referenced in this edition of Financial Services Update. Your teams can begin to personalize financial services with strategic segmentation based on customer financial health personas. Access key demographics on the financially healthy, vulnerable, overextended, and stressed personas.

View Personas Details

Where can you find more insights like this?  

The JD Power U.S. Financial Health and Advice Program empowers banks and credit card providers to elevate customer financial wellness. By analyzing deep consumer insights and benchmarking performance, financial institutions can enhance their advisory services. Leveraging this data enables banks and credit card providers to optimize customer satisfaction, implement best practices, and refine strategies for superior financial outcomes. This proactive approach not only boosts service quality but also strengthens customer loyalty and market competitiveness.

Read the latest press release

More About These Experts 

Jennifer White is the Senior Director of Banking and Payments Intelligence at JD Power, is pivotal in shaping the financial industry’s understanding of consumer behavior. With over 20 years of market research experience, Jennifer leads prestigious studies, including the Retail Banking Satisfaction Studies and the Financial Health & Advice Program, driving critical insights that influence banking strategies across the U.S. and Canada. Her work on consumer financial health, digital banking trends, and fraud impacts is highly regarded and widely featured in top-tier publications like Forbes, The New York Times, and The Wall Street Journal. A respected thought leader and speaker, Jennifer’s expertise helps financial institutions enhance customer satisfaction, loyalty, and trust through innovative, data-driven strategies.

Miles Tullo is the managing director of the JD Power Financial Services team. He oversees the company’s consumer payments program, focusing on point-of-sale choice and non-credit card payment methods. Drawing from over 20 years of experience in both payments and mortgage lending, Miles brings valuable expertise to clients.  

Customers Lean Heavily on Mobile Budgeting and Spending Tools as Concern about High Prices Persists

Even as the national economic indicators seem to suggest a turning of the financial tide, the majority of bank customers in the United States remain worried that consumer prices will rise in the future.

According to JD Power, the percentage of U.S. bank customers who are financially healthy[1] dropped slightly, leaving 70% of customers in some state of financial duress. What’s more, the specter of higher consumer prices seems to be looming, leaving many to wonder about their next move.

Accordingly, customers are counting every dollar out the door, and it’s put an increased demand on the budgeting and spending tools banks offer on their mobile apps and websites.

A Trend Reversal

After months of gradual improvement, the number of customers who are financially healthy dipped slightly to 30% in May 2024, while 45% fall into the vulnerable category.

The number of bank customers who say the cost of goods is increasing faster than their income decreased to 72%, but 88% are at least somewhat worried prices for goods they use every day will increase in the next three months.

Finding the Balance

With concern about high prices stubbornly persistent, customers are keeping a closer eye on their spending. Seven in 10 (72%) say that it is extremely important that their primary bank always shows an up-to-date available balance. Somewhat shockingly, 6% say that their bank’s mobile app or online banking website does not display their available balance, while 6% say they don’t know.

What’s more, 60% of customers say that their primary bank instantly updates their available balance when they make a transaction. Another 21% say it updates within a few hours, 7% say by the end of the day, while 8% say it takes the next business day. Interestingly, online-only banks do the best job of delivering up-to-date balances in a timely manner.

Customers are also increasingly open to financial aggregator tools, particularly as many have shifted funds to pursue higher yield accounts or get a loan from another institution. Three-fourths (75%) say it is useful that their bank shows the balances of their external accounts, rates that were notably high in customers under the age of 40 (88%) and among those in the overextended category (87%).

Controlling the Controllables

It is clear customers feel that some degree of their financial situation is out of their own control. They’re watching costs closely and trying to find ways to mitigate the effects of high prices with the tools at their disposal.

For banks, this means that they need to find a way to empower their customers to handle these ebbs and flows with confidence by bolstering the tools that they are working with in real time. Gone are the days where checkbooks were balanced by hand. Customers rely on the snapshot they get on their primary bank’s mobile app to be updated and comprehensive. Institutions that can do this will see fewer overdrafts and better budgeting management from their customers, which should in turn help customers seize more control over their financial health.

Find out More

This Banking and Payments Intelligence Report is based on responses from 4,000 retail bank customers nationwide and was fielded in May 2024. It was authored by Jennifer White, senior director of banking and payments intelligence at JD Power. Please contact us at the numbers below to connect with Ms. White or to learn more about the underlying research.

Media Contacts

Brian Jaklitsch; East Coast; 631-584-2200; [email protected]

Geno Effler, JD Power; West Coast; 714-621-6224; [email protected]

[1] JD Power measures the financial health of any consumer as a metric combining their spending/savings ratio, creditworthiness, and safety net items like insurance coverage. Consumers are placed on a continuum from healthy to vulnerable.

How Serious is Climate Change and What Can Be Done to Address It? For U.S. Electric Utility Customers, Answer Depends on Where They Live

Utilities Intelligence Report
September 2023

Most electric utility customers in the United States acknowledge that climate change is a real phenomenon, but few believe there is much that can be done about it, according to new JD Power research into consumer awareness, support, and engagement with utility sustainability efforts. Beneath the nationwide average, however, variation exists on a state-by-state basis. 

As part of its ongoing research into customer sentiment and perceptions of electric utility sustainability initiatives in its annual Sustainability Index, JD Power tracks the key drivers that determine whether a customer believes their utility is a leader in addressing climate change. Among them, the study evaluates consumer perceptions on the severity of climate change and beliefs on what can be done to address the issue. This report takes a deep dive into those issues to identify the states where electric utility customers are most and least concerned about climate change, along with their respective levels of confidence in fixing it.

State-by-State Views on Seriousness of Climate Change

JD Power measures customer views on climate change at the state level by asking them to rank the overall seriousness of the issue on a scale of zero to four, with zero being, “There is no climate change,” and four being, “Climate change is very serious.” The analysis captures data from 48 states and the District of Columbia. Utilities in Alaska and Rhode Island did not qualify for the study. 

The national consensus is 2.54, which translates to a 52.7% majority of customers who say they believe climate change a “very serious” or “serious” threat. Utility customers in Washington, D.C., have the greatest sense of urgency about climate change, with an average score of 3.11—the only region evaluated in the study to score higher than 3. It is followed by Vermont (2.91), Washington (2.80), Hawaii (2.79), and California (2.77). 

At the other end of the spectrum, electric utility customers are least concerned about climate change in Wyoming, which posted an average score of 2.11. North Dakota (2.20), South Dakota (2.25), Mississippi (2.26) and Alabama (2.28) follow closely.

Is There a Solution?

When it comes to finding a solution for climate change, electric utility customers are growing increasingly pessimistic. Nationally, the number of customers who say they believe a lot can be done to reduce climate change has declined steadily to 37.3% this year from 40.3% in 2020. JD Power measures customer sentiment on the prospect of addressing climate change by asking how much can be done. Respondents answer on a scale of “a lot,” “some,” “very little” or “nothing.”

The data paints a particularly skeptical picture. In all areas examined, a majority believes “nothing,” “very little” or “some” can be accomplished to deal with the issue. The overall average for those choosing anything but “a lot” per state is 63.5%. In fact, most states are above 60%.

Vermont is the most optimistic state with only 53.4% of respondents believing little can be done, followed by Washington, D.C. (56.1%), Oregon (58.0%), California (58.6%), and New Hampshire (59.0%). 

Wyoming is the most pessimistic state, with 77.7% of respondents saying they feel little can be done, followed by South Dakota (71.2%), Louisiana (69.8%), West Virginia (69.3%) and Kansas (67.8%).

Moving Forward

Regardless of location, most consumers consider climate change a real issue. At the same time, there’s work to be done for increasing awareness of its severity and achieving greater buy-in about utilities ability to do something about it. Today, 82% of electric utility customers are served by a utility with a stated carbon-reduction target^[1]. However, utilities, local governments, and non-governmental organizations need to make more of an investment into customer education and customer participation in energy reduction programs and other initiatives designed to reduce carbon emissions and improve utility sustainability.  Right now, just 19% of electric utility customers are even aware of those efforts, according to our research.

If they are going to become part of the solution, electric utilities need to improve customer engagement and better incentivize participation in sustainability initiatives.

While there’s a great deal of work to be done, some utilities are providing an excellent roadmap for others. AEP Energy and the Southern Company provide reports on their sustainability efforts. Portland General Electric offers a range of clean energy pricing options for both residential and business customers and has a high adoption rate. Both Southern California Edison and DTE Energy offer consumers a wide range of rebate programs. Sacramento Municipal Utility District (SMUD) and Arizona Public Service (APS) have achieved high adoption rates for their time of day/time of use programs. Charlotte, N.C.-based Duke Energy provides a comprehensive set of energy use and analysis products and services. There are others making strides as well but they are only a starting point. 

The issue of climate change is complex and there is no magic communications solution. In some cases, utilities may need to double down on their existing efforts. In other cases, some trial and error may be required to find out what works. Picking up the slack will require more time, determination, and resources than most utilities are currently devoting to their efforts around sustainability and to engaging with their customers about their clean energy goals and plans.

Find Out More

This Utilities Intelligence Report is based on responses from 70,486 utility customers nationwide that were fielded from June 2022 through May 2023. It was authored by Andrew Heath, Ph.D., managing director of utilities intelligence at JD Power. Please contact us at the numbers below to connect with Dr. Heath or to learn more about the underlying research.

Media Contacts

Brian Jaklitsch; East Coast; 631-584-2200; [email protected]
Geno Effler, JD Power; West Coast; 714-621-6224; [email protected] 

 

[1] SEPA Utility Carbon-Reduction Tracker™. Smart Electric Power Alliance (SEPA). Retrieved July 21, 2023, from https://sepapower.org/utility-transformation-challenge/utility-carbon-reduction-tracker/ 

Are Mass Market Buyers Being Priced Out of EVs?

E-Vision Intelligence Report
September 2023

Are Mass Market Buyers Being Priced Out of EVs?  

Key Findings

• Premium EVs Far More Affordable than Mass Market EVs, on Relative Basis: The extra cost that premium automobile buyers are paying to own an electric vehicle (EV) vs. a comparable internal combustion engine (ICE) vehicle is significantly lower than that paid by mass market buyers. For example, in the compact SUV segment—the highest volume vehicle segment in America—the average five-year total cost of ownership of a premium EV is just $287 higher than a comparable ICE vehicle. Mass market EVs in that compact SUV segment cost $9,259 (18.0%) more than their ICE counterparts across five years of ownership.
• Ford Mustang Mach-E Nearly $3,000 More Expensive to Lease than Mercedes-Benz EQB: At the individual model level, this affordability gap between luxury and mass market EVs is most pronounced when comparing the Mercedes-Benz EQB with the Ford Mustang Mach-E. The total cost of a three-year lease for the EQB is not only lower than that of a comparable ICE vehicle in the luxury compact SUV segment, it is $2,899 lower than that of the Mach-E, which is a mass market vehicle. 
• New Mass Market Entrants Coming in at High End of Price Curve: On average, new vehicles in the compact SUV segment are priced anywhere from $10,000-$20,000 higher than comparable ICE vehicles. One exception to this trend is the new Chevrolet Equinox EV, which is projected to be introduced toward the lower end of the price curve, putting it in line with comparable ICE compact SUVs.

Executive Summary

Automobile affordability is not linear. It’s a relative concept that needs to be evaluated in context by getting inside the mind of the consumer and weighing the complex mix of variables swirling around their brains when they’re considering a new vehicle. While a Bentley Bentayga may feel like a bargain at $200,000+ when cross-shopped with a $350,000 Rolls Royce Cullinan, the average Toyota Camry shopper might not be so quick to call either one of them affordable.

That same logic holds true in the EV market. Although many EV forecasts and analyses of relative affordability tended to lump all EVs into the same bucket when there were not that many models to compare, the rapidly growing markets for luxury and mass market EVs are shaping up to be incredibly different places with distinct consumer profiles. As those markets continue to grow, some stark differences are starting to emerge when it comes to relative affordability. Surprisingly, that dynamic is playing out in favor of the premium brand buyer where the affordability gap between EVs and comparable ICE vehicles is negligible. In the mass market segment, however, EVs come with a hefty premium over their ICE counterparts.

This E-Vision Intelligence Report dives into key data points trending in each monthly EV Index update, along with other data points gathered from JD Power studies and pulse surveys, to spotlight emerging trends and important shifts in EV consumer sentiment.

EV Tax on the Mainstream Buyer

EVs now account for 8.4% of the retail new-vehicle purchase and lease market, which represents considerable growth during the past few years, but before that market share can reach a meaningful tipping point, manufacturers will need to tap into the mass market segment. Currently, the lion’s share of EV sales (76%) is occurring in the luxury market. One big reason for that: relative affordability.

According to JD Power data that tracks five-year total cost of ownership in the compact SUV segment—again, the highest volume retail sales segment in the United States—the average premium brand buyer is paying just 0.4% more for an EV than a comparable ICE vehicle. By contrast, the average mass market brand buyer is paying 18.0% more to own an EV. 

Specifically, the average five-year total cost of ownership in the premium compact EV SUV segment is $71,707. That’s just $287 higher than the average for ICE vehicles in the same segment. By contrast, the average five-year total cost of ownership in the mass market compact EV SUV segment is $60,736. That’s $9,259 more than the average for comparable ICE vehicles.

Won’t You Buy Me a Mercedes-Benz?

Digging deeper into specific model-level comparisons, the gap between mass market and premium EV affordability becomes even more detached from conventional wisdom. For example, the most affordable EV relative to its comparable ICE models in the compact premium SUV segment is the Mercedes-Benz EQB, which has an average five-year cost of ownership of $72,107. If one were to buy a comparable ICE vehicle, it would cost $71,420 across the same period, a difference of $687. By contrast, the Ford Mustang Mach-E, which is the least affordable EV in the mass market compact SUV segment, has a five-year total cost of ownership of $67,719. The average five-year total cost of ownership in its ICE competitive set is $51,477, a difference of $16,242.

Leasing costs distort the traditional luxury/mass market relationship even further. Looking at the average total cost of ownership on a three-year lease for the Mercedes-Benz EQB vs. the Ford Mustang Mach-E in July, the EQB ends up being $2,899 cheaper overall than the Mustang Mach-E. In August, however, Ford started passing through the full federal tax credit of $7,500 to Mustang Mach-E lessees, which will bring three-year lease costs back down to just below the EQB.  

Equinox Might Buck the Trend 

The compact SUV segment is clearly a priority for manufacturers and there continues to be a great deal of new activity in the space, with several new models being introduced. On average, mass market EVs are priced around $16,000 more than comparable ICE vehicles. 

One notable exception to that trend is the Chevrolet Equinox EV, which is reported to be coming to market this fall with an estimated starting price of $40,000, followed by a base-trim offering in the spring at $30,000. This would put the Equinox squarely in the center of the cost curve for ICE vehicles in the compact SUV segment, potentially starting a movement towards parity in the mass market.

Methodology

This JD Power E-Vision Intelligence Report is based on data and insights from the JD Power EV Index and the JD Power EV Retail Share Forecast. The JD Power EV Index is an analytics tool to benchmark the growing EV market in the United States. It tracks millions of data points aggregated into six categories—interest, availability, adoption, affordability, infrastructure and experience—to evaluate the progress to parity of EVs with ICE vehicles in the U.S. Each month, the JD Power electric vehicle practice will analyze these data points, and others to spotlight emerging trends and important shifts in consumer sentiment that are helping to define the fast-moving EV marketplace. 

Find out More

This report was authored by Elizabeth Krear, vice president, electric vehicle practice; Brent Gruber, executive director, electric vehicle practice; Stewart Stropp, executive director, electric vehicle practice; and Kristen Richter, senior manager, electric vehicle practice. The JD Power E-Vision initiative is a company-wide program focused on maximizing JD Power industry-leading EV data, analytics, insights and solutions. Please contact us at the numbers below to connect with the authors or to learn more about the underlying research.

 

Media Contacts

Shane Smith; East Coast; 424-903-3665; [email protected]

Geno Effler, JD Power; West Coast; 714-621-6224; [email protected]

Even as Economic Hope Increases, American Bank Customers Remain Worried about Rising Cost of Living

Banking and Payments Intelligence Report
September 2023

 

Even as Economic Hope Increases, American Bank Customers Remain Worried about Rising Cost of Living

As the summer begins to wane and banking customers in the United States start to look toward the final quarter of 2023, some are taking heart in the burgeoning signs of economic improvement. 

According to the latest JD Power data, financial health scores  have remained stable for months, and customers say they have been given hope by lowering inflation, wage increases, and a robust job market.

Still, some customers remain discouraged. One in five said they do not see any signs of hope, and many are still concerned that the rising cost of living and an inflated housing market will force them to accumulate more debt and, in some cases, delay retirement.

The New Baseline

There has been no significant change in overall financial health. Nearly one-third (32%) of respondents are financially healthy, while 44% are vulnerable.

 

 [1] JD Power measures the financial health of any consumer as a metric combining their spending/savings ratio, creditworthiness, and safety net items like insurance coverage. Consumers are placed on a continuum from healthy to vulnerable.Customer sentiment regarding their financial health status, stress levels, and empowerment to improve their financial situation are mostly unchanged since the beginning of the summer as well.

 

Hopes and Fears

While overall sentiment remains unchanged, customers expressed an array of concerns that they have about the economy. The most common worry (21%) is the rising cost of living, not including housing or healthcare. That was consistent across all segments. 

Not having enough money to retire (9%), the rising cost of renting a place to live (9%), incurring more debt (6%) and not being able to reduce existing debt (6%) are also prevalent fears.  
 

 

Customers didn’t express total gloom and doom, though. Nearly one-fifth (17%) said they are heartened by lowering inflation, while 8% said wages have increased in their respective field of work and 7% said there are a high number of job openings.

Somewhat troubling is the 25% of customers for whom none of the options provided offered any hope. The most financially unhealthy—and customers over age 40—were the most likely to express hopelessness.

Money on the Move

As customers contend with these mixed sets of emotions, some continue to move deposits from their primary bank accounts. Deposit movement proportions are staying constant month over month, however the percentage of deposits moved changes with greater frequency. 

 

Interestingly, these deposits are not necessarily being moved to high yield accounts (HYAs). While awareness of HYAs is increasing over time, there are fewer accounts of this type being opened. What’s more, fewer customers are moving from one HYA to another to chase rates, and fewer are saving automatically into their HYAs. As banks try to discern where the deposits are going, these trends illustrate a need for banks to reach out to their customers to increase engagement and, ultimately, keep more deposits in-house.

Personalizing the Path

This month’s data is a mixed bag of optimism and malaise, and the variance underscores the importance of personalized solutions. The economic landscape in the U.S. is currently akin to a Rorschach test: customers are interpreting hope and fear through their own individual lens. As a result, banks must be proactive in tailoring not only their outreach, but their tools and assistance to each individual customer.

The benefit of this personal engagement is that customers’ future actions become more predictable, with banks being able to better anticipate the next need of their customer before they go looking at another institution. Banks can’t simply rely on broad swaths to improve their customer satisfaction. While the economy is in a holding pattern, they’ll need to be proactive about helping customers read the tea leaves and take the next steps.  

Find out More

This Banking and Payments Intelligence Report is based on responses from 4,000 retail bank customers nationwide and was fielded in August 2023. It was authored by Jennifer White, senior director of banking and payments intelligence at JD Power. Please contact us at the numbers below to connect with Ms. White or to learn more about the underlying research.

Media Contacts
Brian Jaklitsch; East Coast; 631-584-2200; [email protected]
Geno Effler, JD Power; West Coast; 714-621-6224; [email protected]

Reasonable Repayment Terms Drive BNPL Usage

Banking and Payments Intelligence Report
October 2023

Reasonable Repayment Terms Drive BNPL Usage

It’s been several years since financial services upstarts reimagined buy now pay later (BNPL) as a point-of-sale (POS) payment method. Since then, this once-obscure way of transacting has been placed front and center at the checkout by merchants worldwide, and 28% of U.S. consumers now say they’ve used it at least once in the previous 90 days. 

But who, exactly, are these BNPL customers and why are they choosing this form of payment over countless other options? While many reports have suggested that BNPL has been most attractive to financially vulnerable consumers who are already overextended on their credit cards, the real BNPL customer profile is decidedly more nuanced. In fact, according to findings from the JD Power 2023 POS Choice Satisfaction Study, BNPL is attracting consumers from across the financial health spectrum, and most consumers are drawn to it for the same primary reason—they like the repayment terms.

Repayment is Top of Mind

Both credit cards and BNPL allow consumers to make purchases they may not be able to pay for immediately. However, differences in consumer perceptions about repayment terms help explain why BNPL is attaining prominence at the checkout. One-third (33%) of consumers indicate a primary driver for using BNPL is “repayment terms are reasonable,” more than any other factor and significantly more than the 6% of consumers who say it’s a primary reason they use credit cards.

Having reasonable repayment terms may also explain the second most common reason consumers use BNPL: budgeting/avoiding overspending and debt. One-fourth (25%) of consumers indicate they use BNPL because it is helpful for budgeting, while only 8% say the same about credit cards.

As one JD Power survey respondent wrote, “[My BNPL plan] is easy to use. There are no complicated terms. It does exactly what it says it will. It’s split into four payments…and that’s that. No tricks, gimmicks, or little details lurking.”

BNPL Isn’t Just for Those Who Are Financially at Risk

Industry watchers have been rightfully concerned about the potential for BNPL to make it easy for consumers to add to their already bloated debt loads. Fifty-five percent (55%) of U.S. consumers are currently at risk of being unable to cover their basic financial needs according to the August JD Power U.S. Polaris Pulse report. Rising costs and increasing debt burdens are affecting people’s ability to pay, and proliferating BNPL loans could worsen matters.

Unsurprisingly, these at-risk consumers are more likely to use BNPL than others. According to the JD Power data, 32% of consumers at risk of being unable to cover their basic financial needs used BNPL in the previous 90 days; this is higher than the 28% usage rate among the total population.

However, these consumers are not alone in using BNPL at the POS. Nearly one-fourth (23%) of consumers who can cover their basic financial needs also use BNPL. Like their at-risk peers, they are drawn to the repayment terms and budgeting benefits, but also BNPL’s low cost of use. They appear to use BNPL to purchase out of preference rather than necessity, an observation likely attributable to many at-risk consumers as well, given the relatively low loss rates on BNPL loans industry wide.

Financially Healthy Customers are Happiest with BNPL

Compared with their at-risk peers, financially healthy consumers also have higher overall satisfaction with BNPL brands and are more likely to be repeat users.

In the JD Power 2023 BNPL Satisfaction Study, administered simultaneously with the POS Choice Study, financially healthy consumers had an overall satisfaction score of 704 (on a 1,000-point scale) with BNPL brands. At-risk consumers, on the other hand, averaged 577.

Financially healthy consumers are also more likely to use BNPL again. More than half (61%) indicated they’d used BNPL more than once in the previous 90 days. This was 5 percentage points higher than the percentage of at-risk consumers who had used it more than once.

While the study results reveal that overall satisfaction scores and reuse rates vary significantly between BNPL brands, financially healthy consumers are happier and more likely to reuse on average. These findings indicate that BNPL has even more room to grow if lenders make targeted improvements and further accentuate dimensions of their offerings that consumers are more satisfied with.

Where Lenders Can Help

Despite using BNPL for its reasonable repayment terms, consumers want lenders to do more. They indicate that the reasonableness of terms is more important than other dimensions of the overall BNPL experience. Yet, consumers have lower satisfaction with those terms than with less important dimensions, such as the security of their account information.

BNPL lenders should do more to explain and administer their repayment terms clearly and without any surprises, particularly for consumers who are financially at risk. The study also reveals that some BNPL lenders have more work to do than others as satisfaction with the lowest-rated brands was significantly lower than the highest-rated brands.

And, not to be forgotten, other dimensions of the BNPL experience also matter to consumers. Differences between lenders vary significantly across these dimensions as well, indicating targeted opportunities exist for each lender to make improvements that drive even more satisfaction, loyalty and demand for BNPL.

Find out More

This Banking and Payments Intelligence Report is based on responses from the JD Power 2023 POS Choice Satisfaction Study and the JD Power 2023 BNPL Satisfaction Study, which included 45,768 and 4,004 responses, respectively. It is authored by Miles Tullo, Managing Director of Banking and Payments. Please contact us at the numbers below to connect with Mr. Tullo or to learn more about the underlying research.

 

Media Contacts

Brian Jaklitsch; East Coast; 631-584-2200; [email protected]

Geno Effler, JD Power; West Coast; 714-621-6224; [email protected]

EV Incentives to Wield Heavy Hand in Q4 2023 and Q1 2024 Sales Volumes

E-Vision Intelligence Report
October 2023

EV Incentives to Wield Heavy Hand in Q4 2023 and Q1 2024 Sales Volumes

Key Findings

• 7,500 Reasons to Wait Until January to Buy an EV: Starting in January 2024 buyers eligible for the $7,500 Clean Vehicle Credit will be able to transfer those funds to the dealer for use as a down payment at the point of sale. This is a significant departure from the current implementation of the credit, whereby eligible buyers do not receive the credit until they receive their tax returns. Whether this new treatment of the credit will cause active EV shoppers to wait until January or buy in the fourth quarter will hinge largely on how well dealers and original equipment manufacturers (OEMs) handle end-of-year incentives and customer education.
• EV Sales on Pace to Hit Three Million by Year End, Four Million by End of Q3 2024: The long-term trend in EV market share has grown significantly from 2.6% of all new-vehicle sales in February 2020 to 9% in September 2023, putting total EV sales volume on pace to reach the three-million-unit milestone by December of this year. At this pace, JD Power projects EV sales to top four million units by the end of Q3 2024.
•  New Calculus of Cross-Shopping Emerges in Compact SUV Market: Despite overall improvements in EV affordability, a stark discrepancy still exists between EV and internal combustion engine (ICE) vehicle pricing in the compact SUV segment, which is the highest volume retail sales segment in the United States. The dislocation has introduced a new cross-shopping phenomenon for the 67% of prospective EV buyers who are also considering non-EVs, whereby for the same price as a mass market EV, they could purchase a luxury ICE vehicle of the same size.

Executive Summary

“What do I have to do to put you in a new EV today?” That’s a question more automobile dealers will be asking in the fourth quarter of 2023 as a complex mix of growing consumer interest, new vehicle incentives and a dislocation of conventional pricing dynamics has new-vehicle shoppers scratching their heads and looking for guidance. 

According to JD Power, with total EV market share now hitting the 9% mark and total EV sales on track to hit three million by the end of this year, the stage is set for rapid-fire growth. Exactly when those sales will happen—and which OEMs and dealers will be the biggest beneficiaries of the transformation—will come down to strategic use of incentives and a concerted effort to educate consumers on the intricacies of EV pricing. 

This E-Vision Intelligence Report dives into key data points trending in each monthly EV Index update, along with other data points gathered from JD Power studies and pulse surveys, to spotlight emerging trends and important shifts in EV consumer sentiment.

Incentives Loom Large

A big change to the Clean Vehicle Credit is coming in January 2024. The U.S. Department of Treasury introduced a new rule this month that will make it possible for eligible consumers to transfer the $7,500 tax credit to the dealer for use as a down payment at the point of sale. While the criteria for qualifying for the credit is still fairly complicated, and requires knowing things about the location where the vehicle was assembled and details on the sourcing of critical minerals used in the construction of vehicle batteries that most mainstream consumers do not know, the execution of the credit itself will become much easier. Prior to 2024, eligible buyers would not receive the credit until they receive their tax returns. 

The chart below illustrates the differences in real-world dollar terms in how the 2023 application of the Clean Vehicle Credit differs from the 2024 application of the credit using a Volkswagen ID.4 as an example. In 2023, a buyer would pay $139 more per month for a loan and, depending upon whether they purchased the vehicle prior to receiving their tax returns for the year, they could end up paying upwards of $828 more in interest during the life of their auto loan than buyers who wait for January 2024 to purchase the same vehicle. 

All of these details introduce a level of consumer education that dealers and OEMs have never had to contend with before. In addition to the new filing and administrative details dealership finance and insurance (F&I) departments will face when applying the credit to a downpayment in 2024, the dealership will also need to make sure customers understand how these incentives will affect their bottom-line costs. Whether this new structure will cause active shoppers to hold off on new purchases until January, or whether they will purchase now may come down to what kinds of additional incentives dealers and OEMs offer in the holiday sales push in the final two months of the year and how well they explain the details to prospective buyers.

EV Sales Reaching Critical Mass

Regardless of whether the new incentive structures will spur sales before or after the New Year, it is clear that momentum is building in total EV sales volume. According to the JD Power EV Index, it took five and a half years (66 months) for total EV retail sales to hit one million sales. From there, it took only 18 months to reach two million. Based on the latest JD Power forecast, retail EV sales will hit three million during the 12-month period ending in December of this year and four million by end of Q3 2024.

More for Your Money?

One complicating factor that could be a drag on near-term EV sales, however, is the pricing imbalance that currently exists between EVs and ICE vehicles in the booming compact SUV segment. Currently, the bulk of mass market compact EV SUV sales are pricing at around $52,000. That compares with just $34,000 for comparable mass market ICE SUVs. Meanwhile, ICE vehicles in the compact premium SUV segment are trading at around $53,000, vs. EVs in the compact premium SUV segment selling for $60,000 or more. 

This has created a dislocation where price-sensitive shoppers in the compact SUV market could likely be cross-shopping a mass market EV against a premium ICE vehicle. Based on the latest JD Power 2023 U.S. Electric Vehicle Consideration (EVC) Study, 67% of new-vehicle shoppers who are currently considering an EV are also considering non-EVs. Until the pricing differential between mass market and luxury EV and ICE vehicles is more balanced, many of these buyers may be swayed to choose ICE. 

 

Methodology

This JD Power E-Vision Intelligence Report is based on data and insights from the JD Power EV Index, the JD Power EV Retail Share Forecast and the JD Power U.S. Electric Vehicle Consideration (EVC) Study. The JD Power EV Index is an analytics tool to benchmark the growing EV market in the United States. It tracks millions of data points aggregated into six categories—interest, availability, adoption, affordability, infrastructure and experience—to evaluate the progress to parity of EVs with ICE vehicles in the U.S. Each month, the JD Power electric vehicle practice will analyze these data points, and others to spotlight emerging trends and important shifts in consumer sentiment that are helping to define the fast-moving EV marketplace. 

Find out More

This report was authored by Elizabeth Krear, vice president, electric vehicle practice; Brent Gruber, executive director, electric vehicle practice; Stewart Stropp, executive director, electric vehicle practice; and Kristen Richter, senior manager, electric vehicle practice. The JD Power E-Vision initiative is a company-wide program focused on maximizing JD Power industry-leading EV data, analytics, insights and solutions. Please contact us at the numbers below to connect with the authors or to learn more about the underlying research.

 

Media Contacts

Shane Smith; East Coast; 424-903-3665; [email protected]

Geno Effler, JD Power; West Coast; 714-621-6224; [email protected]

American Bank Customers Express Troublingly Low Confidence in their Financial Status

Banking and Payments Intelligence Report
October 2023

American Bank Customers Express Troublingly Low Confidence in their Financial Status

Despite the inflation rate in the United States dropping more than 5 percentage points in the past year, the financial health scores of banking customers in the U.S. are the lowest they’ve been in a 12-month span.

According to the latest JD Power data, the percentage of customers that are financially healthy has declined to its lowest point in a year. What’s more, customer satisfaction with their financial situation is the lowest it has been in 40 waves since this data tracking began.

Now, as more customers find themselves in precarious financial situations, retail banks need to start addressing how to help customers navigate their current troubles without compromising their future financial goals.

All-Time Lows

There has been a concerning dip in overall financial health. Less than one-third (29%) of respondents say they are financially healthy, while 46% say they are vulnerable. The number of financially healthy customers matches a 12-month low, while the 46% of vulnerable customers is the highest mark in the past year.

Customer sentiment regarding financial health status, stress levels and empowerment to improve their financial situation also fell to a 12-month low, with satisfaction is at the lowest mark since data tracking began. It’s a discouraging trend as customers entered the final quarter of 2023.

The Anatomy of Customer Savings

As customers watch their financial health deteriorate, there is a renewed focus on savings outside of employer-sponsored retirement accounts. Nearly one-half (44%) of customers say their non-retirement funds are in either a savings or higher yield account at their primary bank, while 24% say an investment/wealth management firm, and 15% say a secondary bank. Additionally, (41%) say they do not have any savings outside of a retirement account.

Predictably, the vulnerable population (60%) and those under 40 (48%) are the most likely groups not to have any non-retirement savings, a stunning 37% of bank customers over the age of 40 and 18% of those who make more than $100,000 annually say they do not have any non-retirement savings.

Emergency in Name Only

While retirement may seem like a far-off aspiration to customers that are just trying to make it from month to month, emergency savings funds may be a more realistic target. Bank customers often think of their savings in buckets and while 41% say they do not have any non-retirement savings; they are more likely to say they have some form of an emergency savings account. Only 10% of bank customers say they do not have an emergency savings account, while 44% have their emergency funds in a savings account at their primary bank.

While the intended use of these funds may be for an emergency, some customers have had to pull funds from them to pay for everyday expenses. More than one-fourth (28%) of customers say they’ve used their emergency savings account in the past 90 days to pay for gas, food or rent. This helps explain why customers do not view these accounts as being a long-term savings fund. 

More than one-third (36%) have transferred money into these types of accounts in the past 90 days, and 30% have checked the interest earned on their account, which may imply an opportunity for banks to reach out to their customers with incentives or other high-yield options to help grow these funds all while hoping to stave off any rate shopping these customers may be inclined to do. 

Surviving Now, Preparing for Later

This month’s data illustrate how harsh economic conditions can linger for months long after the initial crisis is over. While most analysts see inflation and its corresponding complications as an issue of the past, many banking customers in the U.S. are still grappling with the aftereffects. 

As customers look to move forward and try to find ways to safeguard against another bout of turbulence in the future, they are turning their eyes towards savings and how to best optimize these funds when they’re still trying to dig themselves out of a hole. Banks could ingratiate themselves to customers by helping in this regard, actively reaching out with tools, advice and options that would help in both the short and long term. Those banking institutions that can forge more meaningful customer relationships will be less vulnerable to rate and shopping and deposits leavings leaving, too. 

Find out More

This Banking and Payments Intelligence Report is based on responses from 4,000 retail bank customers nationwide and was fielded in September 2023. It was authored by Jennifer White, senior director of banking and payments intelligence at JD Power. Please contact us at the numbers below to connect with Ms. White or to learn more about the underlying research.

Media Contacts

Brian Jaklitsch; East Coast; 631-584-2200; [email protected]

Geno Effler, JD Power; West Coast; 714-621-6224; [email protected]

Strategies for Winning Over Emerging Affluent Customers

There’s a clear and urgent need to win over emerging affluent customers. It’s not just about providing regular banking services anymore; it’s about giving them personalized financial advice and guidance. In this second webinar of the Stop Selling, Start Advising series, dedicated to shifting the mindset from sales to advisory services, Jennifer White, a Senior Director of Banking & Payments Intelligence at JD Power, and Evan Siegel from eGain delve into the strategies for capturing the business of the emerging affluent. They reveal the financial challenges the emerging affluent face and their unique needs in today’s banking landscape.

How can you train your frontline teams to provide effective advice strategies to engage this highly desired audience?

Who Are the Emerging Affluent and Why Should You Target Them?

In order to successfully market to this specific group, it is crucial to understand who the emerging affluent are and what drives them. This demographic includes individuals under 40 with an annual household income exceeding $80,000. According to JD Power data, 9 out of 10 emerging affluent customers are interested in receiving proactive advice from their primary bank. However, despite 60% of this group recalling receiving advice or guidance in the past year, only 30% feel that the advice they received was beneficial to their needs.

Why Add Advice Delivery to Your Retail Banking Strategy?

Understanding the significant impact of not providing financial advice to this group: A bank’s failure to provide advice can negatively impact customer satisfaction, retention, and loyalty by up to 390 points.

What Can You Learn with Powerful Consumer Insights? 

• Financial advice preferences among the emerging affluent: This group wants to receive advice on topics such as in-depth financial reviews, tax planning, and home-related matters to help them prepare for major life events.
• Top channels for effectively reaching and engaging with emerging affluent: While email communication is the top preferred choice,  in-branch experiences remain valuable to them—strategically balance in-branch and digital channels to increase engagement proactively.
• Understand the crucial role of personalized financial advice and guidance in creating a positive customer experience: Banks and credit unions can win relationships with emerging affluent customers and compete against larger banks and fintech companies by enabling resources to address customers’ need for valuable financial guidance fully.
• Harness the power of AI-Powered superior advice and solutions: Take the guesswork out by delivering advice by creating tailored recommendations, making the process efficient, consistent, and compliant.
• Using consumer research to enhance your strategy: To create positive customer experiences, it’s important to consider customer segmentation, channel strategy, banker rewards and scorecards, compensation, hiring profiles, HR model adjustments, marketing strategy, and differentiation from competitors.

To learn more about capturing the business of the emerging affluent and the strategies discussed in this conversation, listen to the full webinar by clicking the link below.

View Full Webinar