The value of brand loyalty cannot be overstated — especially in the banking sector. Loyal customers recommend their bank up to 6x more, spend 25% more (on average) on their credit cards and are less likely to switch to a competitor, according to a study by Bain & Company. It’s obvious loyalty is critical for banks, but it’s getting hard to come by.
With the demand for digital banking higher than ever, many customers are turning to fintech solutions to meet their needs — from tech giants like Google to neobanks like Chime. This new competition is forcing banks to kick their customer retention efforts into high gear.
What are the tactics financial services currently use to keep customers? What can they do differently? We dig into how banking loyalty is changing, the solutions banks should be using and banking loyalty examples from some of the biggest brands.
The Banking Loyalty Situation Today
Digital banking is here to stay. From opening accounts to writing checks to making investments, customers want to do the bulk of their banking online.
- This shift accelerated with the pandemic. Banks closed their physical branches, forcing customers online. And even as we begin to enter a post-pandemic world, online banking shows no signs of slowing down.
- Younger generations are demanding digitalization. Over half of Gen Z uses mobile banking. As this demographic gains more purchasing power, they will demand even more digital-first banking solutions.
This shift towards online banking is levelling the playing field. The industry was once dominated by banking giants. Now, customers are turning to whoever can provide the best digital CX — and fintech companies are doing especially well in this domain.
Banks, on the other hand, are being hit hard by this trend. According to a report from Raddon, there were over 15,000 banks in 2010. Ten years later, that number dropped to just over 10,000. And by 2025, experts predict that number will dip to just 8,000.
While banks continue to revamp their digital comms, churn continues to climb. To stop customers from making the switch to fintech services or leaving for the next hot rewards deal they see, banks must focus on how they can give their brand loyalty a much-needed boost.
Solutions to Cutting Churn in Banking
We know customer loyalty is increasingly important for banks. Among the many solutions for retaining customers is increasing customer satisfaction. A study by Emerald Insight found a strong relationship between the two — the happier your customers are, the more likely they are to stick with your business.
JD Power’s most recent survey also points to personalized financial advice as a key determining factor in customer satisfaction, but there’s a catch. It’s not just about sharing the information. The customer has to remember receiving it, and that can be a challenge.
Here are a few strategies to boost customer satisfaction, build trust and drive deeper connections that support banking loyalty long-term.
1. Pay Attention to Onboarding
A positive onboarding experience is key to retaining customers. According to research, churn is at its highest during the first year — around 25% (compared to an average rate of 11%). The following tips can help you start off on the right foot.
Give a Warm Welcome
Onboarding is often lackluster. To make the experience more enjoyable, try adding personal touches, just as Chase did below.
Something as simple as greeting your customers by name can spark their interest. Plus, personal details show your customers they can expect 1:1 interactions from your business in the future.
Putting your personal message in a video adds a human touch. Hearing a friendly voice or seeing a smiling face plus engaging (and clear!) graphics go a long way in making the experience less robotic — and more inviting.
Make It Quick
A digital-first approach can make for a paperless process. But banks can do more than move forms online — they can cut down on the forms required for the onboarding process. When they don’t, customers are left with an onboarding experience that is more accessible — but just as time-consuming.
Take advantage, then, of all technology has to offer to streamline the process. For instance:
- Automatically pre-fill forms with previously entered information.
- Use e-signatures to avoid the need for scanning physical copies.
The less time customers spend onboarding, the happier they’ll be with your business.
2. Make Money Matters Less Confusing
Over half of U.S. adults feel anxious about their finances. Confusion with complex terms and processes can add to this anxiety, but the following steps can make it less stressful.
Timing Is Everything
A well-timed message can make your customers’ financial journey a lot easier.
Use customer data to create and automate messages that give customers the right information at the right time. For instance, gauge when a customer’s plan is set to expire and send out a reminder in advance so they don’t forget, as Zurich did with this Personalised Video below.
Not only does it reduce potential issues in the future, which can be costly and frustrating, but it also shows customers you’re looking to go the extra mile.
Don’t Let Rewards Go to Waste
Rewards can be great incentives to help you retain customers. Cashback is among the most popular, with over 41% of U.S. adults saying it’s their favourite. As with any loyalty program, rewards sweeten the deal, and they can certainly boost banking loyalty, too.
But to make them valuable, they need to be easy to take advantage of. A complicated program or an offer that’s unclear is more of a hassle than a bonus for customers.
It’s important to make sure customers know how to access and use their rewards. It also helps to remind customers of the value you bring, just as Navy Federal Credit Union did in this year-in-review video below.
Every customer received a video recapping the total points they earned over the year. Even more convenient, videos featured the special perks available with their unique points balance. Customers were reminded of why they love being a cardholder and knew how to put their points to good use.
Visuals are incredibly powerful in breaking down confusing terms and complex policies. It’s science — our brains can process an image in a matter of milliseconds.
Acorns, a fintech app for investing, is one example of a business that simplifies complex financial terms through visuals. The app uses graphs and animations to give users a clear picture of their investments.
The brand leverages visual learning outside of their app, too. Their YouTube channel features various explainer videos, breaking down topics from stock trading to high-yield savings accounts, to help viewers reach their financial goals.
Don’t Forget About Live Agents
While certain questions can be answered with automated messages, other situations require assistance from an actual representative. Research even shows customers prefer human interaction for bigger purchases.
Instead of using digital tools to replace your live agents, then, treat your online resources as a supplement to your customer support centre. Have your support agents ready to answer your customers’ more complex questions, while leveraging online processes to take care of more basic issues.
For instance, chatbots can gauge the level of complexity of a customer’s question, collect basic information and redirect the user to the appropriate representative. It streamlines the customer service process — and gives customer agents the bandwidth to handle more pressing issues.
Another great resource are interactive videos that allow customers to self-serve in real-time. Check out the video below as an example.
This interactive video was created to help mortgage companies answer their customers’ questions about the end of their forbearance period. Viewers can use the chapter markers to get to the information they need straight away and click to learn more about their different payment options.
We’ve already seen how well they work. Interactive videos have increased call deflection by 73% in the mortgages space.
3. Take Inspiration From Innovators
Fintech is driving innovation in the financial services sector. They’re doing more than moving banking online — they’re transforming it. For traditional banks to stay relevant, it’s critical they pay attention to what fintechs are getting right.
Be Omnichannel With In-App Messages
Today’s customers communicate on a variety of channels. Younger generations are especially omnichannel — 87% of millennials and Gen Z prefer omnichannel communications. Fintechs appeal to this by engaging with customers on all of the platforms they’re using — whether it’s email, in-app or social.
In-app communication is especially important. A survey of banking customers discovered 69% spend their time banking online and in-app — 79% of millennials were a part of this demographic. Fintechs appeal to this with push notifications and other in-app communications that meet customers where they are.
Make It Fun
Fintech companies are not only making banking easier, but also more enjoyable. Take Venmo, for example. Users request or make payments to others, and can include a witty emoji, GIF or message. A new feature allows users to even gift-wrap payments for special occasions.
Sending a cash gift? Now you can gift-wrap your payments to make any moment extra special. 🎁✨
The new feature is rolling out to customers over the coming week. Be sure you have the latest version of the app. pic.twitter.com/m6QJ0fnIY5
— Venmo (@Venmo) January 13, 2022
This especially appeals to younger generations. For them, the web is where they find entertainment — and if they’re to bank online, it needs to be just as enjoyable as the rest of their digital experiences.
Gamification is another great way to make finances fun. Many fintechs offer special rewards and badges for meeting certain milestones, such as saving money. Banking solutions can gamify their own services to liven up the user experience.
4. Focus on Trust and Transparency
When it comes to finances, trust and transparency are everything. Customers want to know they can trust a bank with their most important assets.
But trust is built on a close connection between customers and businesses. How can that be done through a screen?
Build Trust When It Matters Most
Customers want to trust you at every stage of their financial journey, but especially important is when they run into issues. For instance, the beginning of the pandemic was a time for banks to prove their trustworthiness. Banks who honored late payments, provided great customer service and helped with other financial issues showed customers could rely on them.
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On the other hand, failing to help your customers during a time like this can destroy their trust in you. After all, resolving issues is when customers need you the most.
It’s important, then, that your customer service — whether it’s a chatbot or live agent — is exceptional. The Qualtrics Banking Report found poor service to be the no. 1 reason customers leave their current bank or credit union.
Nothing ruins customer trust more than a false or over-inflated promise. Upselling or cross-selling additional services that cost more than you’ve led on, unexpected fees and other unwelcome surprises show your customers that you don’t have their best interests at heart.
To be transparent, then, you should make sure customers are explicitly aware of the terms and conditions before signing an agreement. When it comes to recommending additional services, only offer what’s truly of value. They’re small steps you can take to make a big difference.
Creating Lifelong Banking Customers
Today’s customers want their banks to be more than somewhere they can put their money. They want a bank that will help them reach their financial goals, be trustworthy — and offer an incredible digital experience.
With competitors rolling out innovative solutions at a rapid pace, it’s critical banks find a way to stand out. Our Next Generation Video Platform allows banks to wow their customers with the latest in video technology. Personalised, interactive and contextual — the next generation of videos is revolutionising businesses’ digital comms.