Transforming Bank Loyalty into Customer Endorsement: Strategies for Banking Institutions
In the modern world, digitalizing customer interactions has brought numerous advantages to the banking sector, offering convenience and increased efficiency. However, this transition didn't come without its hidden costs, one of which being the loss of emotional connection and human touch. Banking services have become functional yet devoid of warmth, leading the industry into a monotonous sea of sameness.
Starbucks CEO, Brian Niccol, recently pointed out that prioritizing speed over customer experience has chipped away at the soul of their company. Similarly, online banking has diluted the friendly, personal interactions once offered by banks. Customers miss the familiar voices of helpful bank managers and the face-to-face meetings at the branch. Now, as digital algorithms take over, it's easy for customers to switch banks in search of slightly better interest rates.
The Erosion of Loyalty
Accenture's latest Banking Consumer Study, which polled over 49,000 customers globally, unveiled a distressing fact: loyalty is at an all-time low. The survey revealed that a staggering three-quarters (73%) of bank customers have relationships with competing banks – a tale of cheating spouses in the banking world. Although a similar proportion (61%) have remained with their bank for over seven years, this is hardly a comforting consolation. It seems these customers are simply too lazy to leave.
What's missing is fervent advocacy – enthusiastic customers who believe in their bank's commitment to their financial security and are not hesitant to share their praise. The question is, can banks move beyond lazy loyalty and foster advocacy? The survey offers hope that they can.
The Challenges Ahead
Cracks are beginning to show in the foundation with the rise of digital-only banks. Although only 10% deposit their paychecks into these accounts, one-third of customers have a relationship with a digital bank. These banks, rapidly innovating on both the product and experience front, pose a legitimate threat to traditional banks. Complacency is not an option.
Yet, banks with a sizable number of loyal customers are witnessing impressive benefits: both faster revenue growth (1.7 times more than other banks) and a greater share of wallet (an average of 2.8 products per customer over 2.4 for other banks). These banks, just like their competitors, have invested heavily in digitalization, but somehow, they've managed to preserve or even strengthen their connection with their customers.
The Keys to Customer Advocacy
Delving deeper into the consumer survey responses, four main drivers of customer advocacy emerged. Surprisingly, while banks believe they are meeting these drivers' expectations, their customers are less persuaded. This gap is the difference between passive, lazy loyal customers and passionate advocates.
Advocates seek:
- Reassurance: Creating trust and transparency is crucial. Banks must convince customers that the advice given, both in-person and through their AI bots, is as reliable as their deposit security. Building trust will reinforce relationships, empower customers to make sound financial decisions, and strengthen connections.
- Personalization: Listening and remembering customers are essential. Customers want banks to tailor advice to their individual needs and keep track of their financial journey. Offering continuity of conversation across channels will foster a sense of connection and value.
- Delight: Customer satisfaction matters. Yet, many banking service executives view service as a cost rather than an investment. Only when they realize the potential of service to fortify relationships will banks utilize it to drive customer advocacy.
- Rewards: Compelling financial benefits play a significant role in fostering advocacy. Competitive fees and interest rates are powerful incentives, however, a paradox exists: over half of bank customers are unaware of their current rates. Offering value-added services, educational support, and offering rewards that align with customer interests can build advocacy without compromising income streams.
Rebuilding the Human Connection
The question for banks is finding the balance between short-term costs and long-term benefits of building advocacy. Fortunately, generative AI may hold the key. Born to remember, delight, and reassure customers, it is well-suited to bridge the advocacy gap and bring back the human touch to banking.
Fostering customer advocacy isn't the only solution to rekindling the passion between customers and banks, but it's a crucial path to financially profitable growth. In this competitive market where differentiation is scarce, developing a deep emotional connection and turning customers into true advocates can set banks apart.
- The Banking Consumer Survey, conducted by Accenture, revealed that a majority of bank customers have relationships with competing banks, indicating a lack of loyalty in the banking sector.
- Interestingly, banks that have invested heavily in digitalization and preserved or strengthened their connection with their customers are experiencing faster revenue growth and a greater share of wallet, as evidenced by the survey.
- To bridge the advocacy gap and bring back the human touch to banking, generative AI could potentially be a solution, as it is capable of remembering, delighting, and reassuring customers, thereby fostering a deep emotional connection and turning customers into true advocates.
