Banks have long equated tenure with loyalty. If a customer has stuck around for ten, fifteen, even twenty years, that must be a sign of satisfaction, right?
Not necessarily.
Today’s customer might look loyal on paper but is quietly disengaged in practice. We call them the lazy loyalists—not because they’re indifferent, but because they’ve been given few compelling reasons to stay. Inertia, not intimacy, keeps them tethered.
The Loyalty Illusion: What Our Data Really Tells Us
Our recent research across the US, UK, and Canada paints a more nuanced picture and highlights the growing cracks in this traditional view of loyalty:
- Over half of customers have been with their primary bank for more than a decade
- Yet almost 40% have seriously considered switching banks
- Fewer than 1 in 5 say they consistently receive perks or benefits from their bank
- In fact, nearly 50% report receiving no meaningful rewards at all
- Meanwhile, over two-third say they would value rewards for actions beyond credit card spending—like saving or paying bills
- And more than 50% already spread their products across multiple institutions
This isn’t a loyalty gap – it’s a loyalty wake-up call.
Loyalty Needs a Refresh
The broader competitive landscape is shifting fast. New entrants are setting a high bar for personalized, real-time engagement. Customers are diversifying their financial relationships, and traditional institutions are finding it harder to stand out. Convenience is no longer a differentiator.
Banks must stop treating loyalty as a downstream marketing tactic and start seeing it as a core business strategy, one that touches pricing, personalization, engagement, and ultimately, profitability in the form of an improved CAC:LTV ratio.
Too many banks rely on rewards programs that prioritize credit card usage while ignoring other forms of valuable behavior. But customers aren’t just spenders. They’re savers, renters, bill-payers, investors. And their loyalty is shaped by how well their bank sees and supports the full picture of their financial lives.
That means it’s time to broaden what banks recognize and reward. Not just transactions, but relationships. Not just high spenders, but high committers. Loyalty isn’t earned with generic perks. It’s earned through relevance, recognition, and respect.
A New Approach to Loyalty
To move in this direction, banks need to shift from one-size-fits-all incentives to programs that:
- Acknowledge behaviors like saving, bundling products, and consistent payments
- Offer personalized, timely benefits that evolve with the customer
- Reinforce long-term engagement, not just short-term activity
This isn’t just about designing better programs. It’s about rethinking the role loyalty plays in customer strategy. It’s about embedding reward and recognition into everyday interactions, so customers don’t just bank with you—they advocate for you.
The Squeezed Middle: Why Mid-Sized Banks Should Be Paying Close Attention
Loyalty erosion is a challenge across the board—but it plays out differently. Larger banks face complexity at scale: fragmented systems, multiple product lines, and rising expectations for personalization. Mid-sized banks may move faster but often lack the tools or resources to execute at scale. They’re often caught in the squeezed middle: not as deeply entrenched as the largest incumbents, and without the digital agility of fintechs and neobanks.
As a result, even long-standing customers are vulnerable to churn if they feel unseen or undervalued.
Yet this middle segment also represents a powerful opportunity. These banks are trusted, embedded in their communities, and well positioned to act—if they can modernize loyalty in ways that match their pace and priorities.
That means:
- Competing on relationship value, not just rates or reach
- Recognizing deeper engagement across product lines
- Building loyalty incrementally, without overhauling the core
When mid-sized institutions can recognize deeper engagement and respond in real time, loyalty becomes a lever for growth—not a liability.
This isn’t about copying Tier 1 banks or fintechs. It’s about building a loyalty model that’s right-sized, relationship-driven, and built to compete on what matters most: relevance.
Zafin’s Role in Loyalty Reinvention
At Zafin, we believe loyalty must reflect the entirety of the customer relationship. Not just because it’s fair, but because it’s smart. Recognized customers stay longer, buy more, and bring others with them. Loyalty, when done right, becomes a growth engine.
That’s why we built our Loyalty Rewards capability to:
- Recognize and reward customers based on their relationship value – not just their account or spend activity
- Tier and reward them based on real commitment, not superficial activity
- Design programs that reward commitment, not just consumption
- Deliver flexible, modular benefits that evolve with the customer
It’s how we help banks earn loyalty, not assume it.
