Digital channels are important battlegrounds for customer loyalty in banking. Customers’ expectations are increasingly set by big tech companies that offer frictionless, streamlined digital experiences — experiences that they’re starting to bring to financial services in the form of eWallets, loan products, and more. Banks must leap ahead if they want to remain competitive, and attract and retain the types of loyal customers who generate their steadiest revenue streams.
Improving digital experiences is also becoming necessary to maintain a competitive edge over other banks. According to Bain research, customers ranked the digital purchase process for a mortgage as easier (by a margin of 14 percentage points) when their bank was a “loyalty leader,” compared to when it was a “loyalty laggard.” Additionally, the report found several other correlations between a mature digital experience and customer loyalty, such as the ability to complete a transaction without moving to a human channel.
The digital experience encompasses touchpoints that reach many different audiences. But if building loyalty is the goal, banks should focus first on improving digital communication with existing customers. By delivering four key digital experiences, banks can build stronger customer relationships for the long term.
1. Communication via mobile
When banks want to communicate with customers digitally, they tend to rely on third-party channels like email. These channels tend to be expensive to scale, difficult to personalize, and easy to tune out amid other digital noise. (We’ve all missed important emails in our overcrowded inboxes before.)
To stand out, banks need to leverage the one digital channel that’s totally under their control: their mobile banking apps. By expanding the focus of their app to include content, a bank’s mobile app can become a channel for personalized, timely communication, in addition to servicing customers’ transactional needs.
Using this technology, banks can serve relevant content inside the app. For example, a customer who’s saving for a down payment on a house might be served articles on budgeting and boosting their credit score. Banks can also use notifications to nudge customers toward particular behaviors, such as diversified category spend on a credit card. Essentially, banks can become an integral part of customers’ everyday lives.
2. Personalization powered by context
We’re long past the days when broadly targeted seasonal campaigns generate the marketing results banks need. Customers want to feel like the brands they interact with really know them, and that means personalizing communication on a 1:1 level.
Banks can harness the power of their customer data to tailor experiences, content, and offers to individual customers’ needs. In particular, they can leverage contextual data like location, weather, and historical behavior data to deliver the right messages at the right time.
For example, when a customer who spends a lot on dining travels to a new city, a bank could use current location data — collected via the bank’s mobile app — to recommend restaurants nearby where the customer could earn cash back rewards on their credit card.
This kind of context-driven personalization could also include timing communications to a particular time of day. For example, a bank may wait to send an offer for an investment product in the evening when the customer is more likely to be at home and able to talk about the offer with their partner.
By communicating in the right place and at the right time, banks do more than just increase the likelihood of conversion. They also build trust with customers who are tired of interruptive marketing like online pop-up ads and robocalls. Communication informed by context is less invasive and more respectful of customers’ time.
3. Privacy protection
Banks handle a great deal of sensitive information, so protecting customer privacy is a top priority — and a key differentiator from big tech. Banks can build trust by being transparent about how customers’ data is being used and why.
For example, a bank should always ask permission before using a customer’s data to personalize communications. By using personalization to add value for the customer, banks can create a tight value exchange — and give customers a real incentive to opt-in. Seventy-eight percent of banking customers will share data in exchange for personalized advice.
Many banks are nervous about sharing data with outside partners due to compliance and data security concerns. Fortunately, there are methods of data-sharing that keep customer data safe. For example, Flybits’ platform lets us generate insights from banks’ data without co-locating it on our own servers. By keeping their customer data on premises, our bank partners can ensure it stays safe — while still reaping the benefits of our data expertise.
4. “Surprise and delight”
When a bank has assembled the building blocks of a great digital experience, it can begin to take things to the next level. Personalized digital experiences don’t have to be merely useful — they can also be delightful.
Imagine if a bank could send a customer an offer for discounted Uber or Lyft rides when they’re out at a restaurant, and it’s just started to rain. Or, if a customer regularly buys Starbucks coffee, the bank could offer them 10 free lattes as an incentive for opening a new credit card.
Giving experiences and offers a personal touch helps cement the feeling that a bank really understands the customer, reinforcing their relationship and building loyalty that lasts.
The battle for customer loyalty in banking is intense. However, banks that focus on improving digital communication with existing customers will always have an edge. By leveraging their existing customer data and digital communication channels, they’ll not only build digital experiences that compete with big tech — they’ll also win over customers by going above and beyond their expectations.
