Driving new client relationships (and ultimately more deposits) is at the core of most retail banks’ strategy. With the right incentives and rewards, you can attract customers of the right quality and develop profitability from their engagement with your products. However, more than ever it’s less about tapping into new customer pools — it’s about keeping the customers you already have.
Customer retention is in many ways trickier than customer acquisition. A compelling signup offer might be enough to tempt a potential customer away from their previous institution. But that door swings both ways — especially with the rise of digital-only challenger banks. Customers you pulled in with a lucrative offer may simply turn on their heel and head for the next sign up bonus. It’s their daily banking experience that must be optimized to maintain their business.
The only way to provide these experiences and improve your customer retention is with a data-driven approach. Finding out what makes your customers tick is essential when constructing an environment where you can deepen a relationship and ultimately make those trifling sign up bonuses seem trivial in comparison.
Here’s what you need to know:
A New World of Banking Means New Customer Expectations
Right now, one of the hottest buzzwords in the financial industry is “Open Banking.” And it’s no surprise given the enormous changes it’s instigating in banking — now that data is leaving silos and can be shared more easily between institutions, switching your banks has never been easier. Add in the preponderance of digital-only banks with no fee primary chequing accounts, and you’ve got an environment ripe for choosy customers.
It’s not just the banking sector that’s reshaping customer behaviour, either. With media streaming services like Spotify and Netflix using customer data to offer tailored experiences and retailers like Apple and Amazon following suit, people are losing interest in one-size-fits all experiences, instead opting for bespoke interactions with brands in nearly every sector.
One of the keys to customer retention is recognizing the paradigm shift that is already in full swing. Adopting an attitude friendly towards innovating customer experience is a first step. And acquiring the tools to do so is next.
Maximizing Customer Retention With a Data Driven Approach
Identifying the pain points customers are having is essential for your bank’s success. According to Tom Blacksell in his article for Finextra:
“Offering a frictionless and fluid customer journey is vital for any business that is serious about keeping their customers happy in a fast-paced digitalised word.”
Blacksell also notes in his article that speed and ease of signup when accessing banking products is extremely important to customers. 51% of people in his research were annoyed by slow sign up processes, which could cause them to abandon the product (or relationship) altogether. Worse, only 35% of businesses admitted to using automation to speed up decisions about new customers, which drastically reduces the time and friction.
It’s one thing to acknowledge this data, but it’s a whole other thing to actually act on it. Banks right now know that using customer data to speed up processes will ultimately allow for better experiences, deeper relationships, and more effective customer retention. But it costs money and takes a dedication to innovate. Is your bank prepared for this?
Banks are data-rich organizations. They can leverage this data to predict what their customers want and need, and optimize processes accordingly. The easiest way to accomplish this is through a FinTech partnership, so you can buy out of the box tech that’s ready to roll as fast as your customers.
It’s common knowledge that banks need to be more customer-centric if they want to keep business. But now more than ever, this requires a data-driven approach to work, and banks need to be prepared to innovate immediately.
Are you ready to take the first steps to creating a robust customer retention strategy? Get in touch with Zafin today!