Banking on customer loyalty: how can banks and financiers improve their retention strategies?

With fintech providers popping up from every corner of the globe and offering a brilliant customer experience through slick digital journeys and instant customer service, traditional high street banks are now expected to deliver the same level of service but with less agile systems. If banks want to keep customers loyal, they need to provide a service that takes this agile approach – anything less just won't cut it.

However, some providers are being left behind. So it was no surprise when our latest research uncovered that almost a quarter of consumers admit they're not loyal to their bank/financial services provider, while just one in five feel their bank values them as a customer.

After reaching out to 2,000 UK consumers, we also found that just 18% believe it pays to be loyal to their bank/finance provider, with those surveyed noting good customer service, trust, and reliability as the biggest factor in their decision to stick with a provider.

What's more, the data shows that over 12 months, the average consumer spends £140 on banking/financial services (not including big-ticket purchases such as mortgages and loans etc.). They're typically loyal to their provider for seven years, and less than half (40%) have been a customer at their bank for more than 10 years.

While the new approach to banking is exciting, different, and wholly necessary, it tends to be harder to retain customers than it was a decade ago – especially for traditional institutions. It's not necessarily people switching providers that's the problem for banks – many customers now keep hold of their old accounts but open several others with a range of providers to fulfil different requirements. The problem here is that one person's custom is now typically split three or four ways, rather than just one.

Countless innovations in recent times make customer loyalty more and more difficult for banks to hold onto, as customers shop around to make the most of new offerings and diversify where they put their money. With this only set to increase over the coming years as fintech continues to thrive, financial services firms would be wise to consider their customer experience and loyalty strategies now and get ahead before it's too late.

Ranked in order of importance:

 1. Good customer service.

 2. Reliable & good quality product and service.

 3. Trust in the brand and business.

 4. A loyalty scheme.

 5. Ethical business practices (including paying employees fairly and supporting employee wellbeing).

 6. Receiving regular offers relevant to them.

 7. Brand values that align with their personal values.

 8. The business giving back to charities and communities.

 9. More engaging, personalised, localised marketing.

 • 60% of consumers admit bad interactions impact their loyalty to a brand and often result in them cutting ties.

 • Half would pay a brand more for a product/service over their competitors if they trusted them and knew they were reliable.

 • 24% would leave a brand if they found out they mistreated employees.

 • 72% say they're loyal to their banking/finance provider.

 • Almost a quarter of consumers admit they wish their bank offered them more perks.

 • 25% confirm they're rarely offered any perks from their bank.

 • Just 6% are often offered perks from their bank.

 1. Retail (supermarket).

 2. Mobile provider.

 3. Food service and restaurants.

 4. Finance (banking).

 5. Hotels and hospitality.

 6. Travel (airlines, trains).

 7. Utilities (gas and electricity supply).

 8. Insurance (home, car, life, health.

 9. Telecoms (landline, at-home broadband).

 10. Media (streaming services - TV, music, entertainment, etc).

 11. Retail (fashion).

 12. Leisure (gyms, cinemas).

We expect the banking and financial world to innovate a lot over the next few years. And with this will come increased competition, making it more crucial than ever for those in the industry to focus on ramping up their customer retention strategies. 

Tech advances – like AI and machine learning – will make personalisation a breeze. But it's how financial service providers use this data that'll make all the difference. Building trust and making customers feel valued, offering bespoke rewards, a great service, and reliable products are the key factors that will help to boost long-term loyalty. 

We're confident the next few years will bring a huge range of opportunities for bankers/financiers to build massive gains on the loyalty front. But it'll be interesting to see who uses the tools available effectively.

So how can banks – both traditional and challenger – keep pace with this constantly evolving market and grow a loyal customer base?

Learn more by reading our full Banking on Customer Loyalty report. Please enquire for your copy.