Personalization and loyalty in retail banking

September 29, 2021
4 min read

Since the start of the global COVID-19 pandemic, the need to deliver digital-first customer experiences that support specific needs, different life goals, and varying preferences for when and how customers want to engage with their bank has been critical. Yet, despite all the talk about banks accelerating their long-term transformation strategies as a result of the pandemic, global market research firm

Forrester believes banks and credit unions were passive beneficiaries of the pandemic.

Consumer behavior true driver behind banks’ digital transformation

According to Forrester’s The State of Digital Banking 2021 report, COVID-19 may have accelerated consumer digital banking adoption, but this adoption does not necessarily reflect innovation on the part of traditional financial institutions. In fact, veteran financial technology reporter Tom Groenfeldt highlights that the most striking aspect of the report is “how much of the advance in digital banking has been led by consumers” – not by the banks themselves. As such, intra-pandemic growth of digital delivery channels should not be accepted as evidence of the success of banks’ digital transformation strategies but rather, the result of consumers leveraging contactless, mobile and digital wallets at unprecedented levels across the world.

Forrester also reports that most banks continue to struggle with creating and executing a coherent digital transformation strategy. As a result, neobanks and other challengers are gaining ground, poised to deliver highly personalized, all-digital services to consumers quickly.

Personalization: The secret to boosting customer loyalty in banking 

According to the  report, “Insights for Investments to Modernize Digital Banking,” the ability to personalize experiences is a critical expectation among today’s bank customers today. This expectation is true across the vast majority of the 1000+ banking customers surveyed for the report, regardless of age, income bracket or bank size.

Here, banking customers describe wanting to enjoy the benefits of a consistent, customized experience that includes real-time access to preferred products, services and capabilities based on changing financial goals and priorities. This level of personalization, when combined with strong privacy controls, boosts engagement, loyalty and brand differentiation.

The Capco report found that consumers are likely to be loyal to a bank’s brand if it is easy for them to engage online or via mobile, and that they can still talk to a bank representative when needed.

Some interesting findings from the report worth mentioning include:

  • 72% of respondents rated personalization as “highly important”, with 79% of millennials surveyed placing the highest value on personalization.
  • 86% of people who felt personalization is important to their experience are willing to provide feedback on their experiences at least annually.
  • Over 70% of customers display an interest in rewards features; younger generations are more likely to switch banks due to rewards perks
  • Consumers are willing to pay a premium for personalized, tech-driven banking services that proactively meet their financial needs. Such services include alerts before recurring charges, paperless banking, photo bill pay, and single dashboards across multiple accounts, among others.

As such, the balance of power is increasingly shifting towards the customer-centric, digital models provided by neobanks and fintechs and away from the legacy sales and servicing models of traditional financial institutions. As noted in the report:In a digital era, where personalization is paramount, banks will require a deep understanding of customer expectations to strategically innovate on current service offerings and keep pace with growing expectations from an increasingly digital customer base.

Fortunately, banks are well-placed to make this transition:

  • Banks are well-entrenched when compared to their competitors, especially given that customers have been using traditional retail banking products for far longer than the offerings of challenger banks and non-traditional players.  
  • Banks have access to a mammoth level of data on customer transactions and behavior – far more than their up-and-coming rivals – and are consequently best-placed to leverage this data into meaningful insights for how to boost loyalty. 
  • Banks are well-structured when compared to their competitors and have the kind of monetary and human capital necessary to improve the customer experience.

Leveraging pricing to grow customer loyalty

As the frenzied run up of digital banking hits a plateau, banks may be tempted to pause on digital transformation efforts as they wait to see where COVID and customer expectations will go next. However, banks have been handed an opportunity in this unsettled time to shake things up internally and reimagine the relationship they want with customers, well beyond the pandemic.  Best in class partners, like Zafin with it’s award-winning product and pricing platform, are aligning with banks to help propel their transformation efforts and become more agile and responsive to customer needs, using data-driven insights.

Read more about how to stay ahead (and even exceed!) customer expectations through relationship-based products, packages and offers.

Founded in 2002, Zafin offers a SaaS product and pricing platform that simplifies core modernization for top banks worldwide. Our platform enables business users to work collaboratively to design and manage pricing, products, and packages, while technologists streamline core banking systems.  

With Zafin, banks accelerate time to market for new products and offers while lowering the cost of change and achieving tangible business and risk outcomes. The Zafin platform increases business agility while enabling personalized pricing and dynamic responses to evolving customer and market needs.   

Zafin is headquartered in Vancouver, Canada, with offices and customers around the globe including ING, CIBC, HSBC, Wells Fargo, PNC, and ANZ.

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