Keeping your customers loyal during the rapid rise of online banking

How to keep customers loyal in online banking while adding the human touch at the same time

Users have been gradually moving onto digital banking channels, such as online banking apps, for several years and many users have welcomed this digital shift and the benefits it’s brought with it. For many people, managing their finances and performing transactions in-app and on-the-go has proven a great success. 

Online banking is highly effective for certain things, like checking balances, transferring funds, and making payments. Now that users are comfortable doing these things online and in-app, there is an opportunity for financial providers to begin offering more complex banking tasks, while at the same time delivering personalized services to each customer that strengthen customer loyalty. 

Just because customers no longer meet their financial advisor face-to-face does not mean the caliber of the advice and the personalization of the service have to suffer. In fact, thanks to AI, automation, and intelligent applications, customers can experience tailored and highly personalized services in-app at home. 

Read on to learn more and how to effectively strengthen the loyalty of your online banking customers. 

The impact of recent events on customer banking habits and loyalty 

As people change, so do their banking habits. The events of the past year have had an obvious impact on consumers’ banking habits, but it’s still a mystery which new behaviors will stick and become permanent. It’s important that financial institutions of all standing need to understand how their customers are feeling to continue delivering relevant services to them. 

The adoption of digital banking has accelerated in the past year too. With people limited to doing their banking remotely and online, many users have had no choice but to bank using digital channels. And users reacted quickly too, showing how adaptive they can be when necessary. For instance, 50 per cent of users interacted with their bank through their mobile app or website at least once a week in 2020 compared to 32 per cent in 2018, a recent study found. The same study found that consumer trust in banks’ commitment to their clients’ interests is failing too. Trust was declining even before the pandemic struck, but it has indeed worsened things. 

That said, it is not all bad news. Despite a broad industry decline—and a challenging transition for traditional bricks and mortar institutions—banking and finance is still one of the most trusted sectors. The migration to digital banking is accelerating and customers are quickly adapting. People are interested in managing their finances from the convenience of their smartphones and this increases the touchpoints financial providers can use to stay relevant in their consumers’ daily lives. 

Points to consider to improve customer loyalty in online banking 

Digital banking lacks person-to-person interaction and, on first appearance, this may seem like a barrier to strengthen personal and emotional connections with customers. However, this does not necessarily have to be the case. Intelligent automated chatbots and live messaging services are powerful opportunities to personally address consumers’ questions and concerns, and they may even be more favorable options for younger users who prefer to bank online. 

One thing we do know is that the switch to online banking is unlikely to be reversed once the pandemic is over. For financial providers wanting to maximize the benefits of digital banking, it’s essential to infuse a much-needed dose of humanity and personalization into online channels. For instance, consider the following five points in your online banking channels to help improve customer loyalty:

  1. Recognize your customer base and examine the distinct needs and expectations of your customer segments.
  2. Understand shifting consumer expectations and determine whether changes in customer behavior are likely to be temporary or permanent.
  3. Develop a strategy and operating model to respond to the market changes likely to become permanent. 
  4. Prioritize technology investment and acquire technology that improves your flexibility, agility, and speed to market. 
  5. Add a human touch and embed humanity and personalization into the digital channels where they will have the greatest impact. 

Build on these customer sentiments to improve your NPS score 

There is no question that the increase in the variety of online banking services and changing customer behavior are making banking more competitive. As growing fintechs and online-only banks are taking advantage of new opportunities, traditional banks are reevaluating the loyalty of their customers. But, customer loyalty remains a key indicator to show financial providers they are heading in the right direction as they increase their online operations. 

Net Promoter Scores (NPS) have been used in banking to drive performance since 2003. While they identify customer sentiment which, in turn, can be used to set achievable targets for improvement, the goal should always be to achieve a ten. Indeed, recent research highlights the fatal flaw of the NPS system: that nine does not equal ten, and—consequently—many organizations set the bar one point too low. A customer who rates ten is significantly more likely to become a brand advocate and promote your services by word-of-mouth over one who rates a nine (who is in turn far more likely to be indifferent about your services). Assuming nine out of ten is a satisfactory target has a substantial impact on referrals, retention, and financial results.  

Use NPS to remove customer pain points and improve customer service. This, in turn, will help to build trust with your customer base. Consider adding the following statements to your next NPS survey to better understand your customers and highlight how you can keep building up loyalty:

  1. The financial provider is easy to deal with. 
  2. There is a detailed help section as well as online chat support. 
  3. I trust the financial provider to look after my interests. 
  4. The financial provider has an excellent digital banking service. 
  5. The fees and charges are transparent and fair. 
  6. I am treated as an individual. 

Remember that if you are not scoring a ten, there is room for improvement. 

Word-of-mouth is still a powerful force in the world of finance. A recent survey found that 44 per cent of millennials choose their mortgage provider based on a recommendation from friends and families, and about one-third of people choose a financial provider for a loan for the same reason. 

Thinking about customer acquisition, it is significantly cheaper to acquire a new customer through a word-of-mouth recommendation than marketing and advertising. Determining how to convert customers into loyal brand advocates is essential to developing a robust online customer base. To win customers over, and convert them into those loyal brand advocates, the bar for customer satisfaction must be set to a ten, because this is what consumers demand. 

Example questions for personalized value and increased customer loyalty 

Alongside closed NPS statements, it is important to ask customers open questions too. These help to develop a personalized experience, encourage consumer loyalty, and help to measure overall customer sentiment towards you. 

The below eight questions can help to deepen your understanding of your customers’ needs and long term plans which in turn can help you develop more tailored services: 

  1. What would it mean for you to get what you want?
  2. What is working well in your lifestyle, your career, your family life, and your relationships? 
  3. What is working less well in your lifestyle, your career, your family life, and your relationships? 
  4. Is there anything else you would like to tell me about this? 
  5. What are the five things that you are most proud of? 
  6. How does this correspond to your plans, your lifestyle, and your values? 
  7. If you called me three years from now, what topics that we have discussed will have changed? 
  8. Is there anything else you think I would benefit from knowing? 

A personalized online banking service offers value-for-money 

People have always valued price-competitiveness very highly. Today, price is more important than ever, largely because of the sudden economic stress and uncertainty caused by recent global events. Underlying this sudden external change is the growing digitalization of consumer banking experiences, which is resulting in customers viewing banking as a commoditized product. This means that customers carefully consider value-for-money when they compare financial products, such as current accounts. However, value-for-money does not only include monthly fees and rates. Indeed, it is important to emphasize how other aspects of your service provide value-for-money too. 

One great way to show value-for-money to your customers, and get loyalty points at the same time, is to show how you can look after their long-term financial wellbeing. This can be in the form of personalized solutions, such as savings and tips based on spending habits, or providing personalized investment advice. 

Interest is growing among digital banking customers for money-saving solutions and financial management advice, and a tailored service that offers these has a greater chance of securing loyal customers. Plus, personalizing financial solutions can help to wean customers away from over-focusing on pricing points alone. 

Keep up with change to strengthen customer loyalty in online banking 

Consumers have reacted swiftly to the changes the pandemic has brought. Unable or unwilling to bank in person, half of all customers now do at least part of their banking online. This is a unique opportunity for financial services providers who are swift to act and keep up with consumer trends.  

Many financial providers moved at unthinkable speeds in 2020 to cope with the unprecedented situation. Banks have made significant progress with personalized online services, but the rollout of new digital banking services continues to be hampered by long-standing legacy systems and internal culture. The timing is also challenging with many financial institutions tapering support and making difficult credit decisions related to the pandemic at the exact time re-establishing personal bonds and rebuilding trust with customers is essential. However, keeping up this entrepreneurial spirit that has enabled many financial providers to effectively navigate recent events, and continuing this will doubtless give you the best chances of success as you reexamine online consumer habits and strive for customer excellence. 

One way to adapt to your various customer’s needs is to explore automated solutions. These are intelligent applications that can effectively handle customer questions and expectations. Robo-Advisor is one such platform. It is an intelligent, self-guided solution you can use to enable your customers to set up their investment portfolios themselves online. The simple and intuitive user interface prompts investors to create their risk profiles and select portfolios to match. Customers can compare simulated portfolios before making their final decision and they can track their investments online. Plus, Robo-Advisor can be white-labeled and implemented in just a matter of months. 

Visit our solutions page to view Robo Advisor as well as our other innovative advisory software solutions for financial institutions.