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Maintaining customer loyalty has always been and should always be a key priority for financial institutions. With many banks offering similar services and rates, it is imperative to differentiate yourself by creating a unique and satisfying experience tailored to your customers. Another undeniable advantage is an acquired client's loyalty. According to The Guardian, a UK or Scottish user is more likely to divorce than switch banks. Attracting a young and loyal user can therefore create an interesting source of future income. The typical customer from the emerging Gen Z is a good example.
When customers decide to stay with your bank, it is usually for two main reasons – convenience, which you can't control much, and frequent use of your products. Increasing engagement through digital channels contributes to both - encouraging greater use of tools such as bill pay, P2P payments and personal financial management (PFM).
Remember that customer expectations of digital experiences are heavily influenced by non-banking apps like Netflix, Instagram, Uber, Bolt and others pushing the bar high. Banks that personalise their services and keep up with the tech players by guiding customers through their finances and providing features that make every day more enjoyable, are far more likely to maintain long-term relationships. Feedback is given very quickly in today's digital age in the form of bank/fintech app reviews on Google Play and AppStore. Proactively, they can be surveyed using Net Promoter Score (NPS). For a step-by-step guide on how to improve these metrics, check out our other article: How to Improve Banking App Store Reviews.
Direct deposits are one of the easiest ways to ensure that customers use your account regularly. Make it easy to allow the customers to move their payouts directly into your account. According to statistics, up to 87% of fully engaged customers use direct deposits, which strengthens their relationship with the bank.
TIP: Create simple instructions on how to transfer direct deposits and offer a reward, such as a small cashback, for activating them.
Customers often need to update their payment card details for their regular payments. Offer an easy way to change these details and incentivize customers with rewards like cashback. Regular card usage increases the number of customer interactions with the bank.
TIP: Offer automatic data updates at key merchants and alert users to the possibility of earning a reward for each successfully updated card. A good example would be a discount on meals ordered through Foodora using the bank's app.
Notifications and alerts play a vital role in how active customers are. Nearly 60% of fully engaged customers regularly use notifications to stay informed about transactions, upcoming payments or unusual activity. Real-time alerts provide a sense of security and better visibility into finances.
Notifications and alerts have a huge impact on users, yet many banks do not have effective strategies or dedicated staff. Few things are as critical to financial service providers as notifications. In fact, the use of notifications is one of the three most powerful factors to increase mobile banking engagement rates. Only 55% of bank executives, according to the Forrester survey, "dedicate staff to mobile messaging and notifications," and only 58% say they "have the necessary talent in-house to execute a mobile messaging and notifications strategy."
However, the quality of notifications is key - they should add value and help users manage their finances more effectively, not act as spam. If notifications are too frequent or irrelevant, this can lead to them being ignored and therefore a drop in engagement. Studies conducted by Google have shown that approximately 27% of users cite "too many notifications" as the main reason for uninstalling apps.
TIP: Allow users to personalise the types of notifications they want to receive and set up quick actions directly from the notification (e.g. payment approval or limit settings). Below is a sample of such notifications for Revolut.
Digital banking offers a wide range of services such as bill payment, top-up deposits or automatic payments. Fully engaged customers typically use 3.5 products, 40% more than inactive users. The more services they use, the tighter their connection to the bank.
TIP: Promote services that make customers' lives easier, such as the ability to find the nearest ATM directly in the mobile app, complete with an overview of fees and logos of each bank.
P2P payment services allow users to instantly transfer money between each other, which increases user satisfaction and loyalty. A simple solution is Revolut, for example, where you pay by contact, or RevTeg. Banks offering P2P payments also have the opportunity to improve budgeting features by allowing customers to categorise transactions and track their spending or split their spending with friends. You can see the trend of P2P payments in InsiderIntelligence's data.
TIP: By highlighting the benefits of your P2P services (payments), you can, for example, make your users ambassadors with the split-spend feature. The user can simply use the split spend feature to pay at a restaurant by sending a link to 5 of their friends with whom they visited the restaurant with. Everyone simply uses the link to pay and you have the space to onboard these friends. You can make onboarding even more interesting by giving a discount or signup bonus for paying the split spend.
Digital wallets, such as Apple Pay or Google Pay, have become an indispensable part of modern banking and are already standard. Encourage customers to add their payment cards to their mobile wallets and offer incentives for them to use this feature. Some of the latest methods include Samsung Pay, Garmin Pay, FitBit Pay and other OEM providers.
TIP: Create user-friendly tutorials on how to add cards to digital wallets, and offer rewards for each successfully added card, such as cashback on first use.
Effective digital communication not only strengthens the relationship with your clients, but also provides real value by helping them better understand their finances. By using intelligent transactional data analytics, you can provide clients with clean and clear data that clearly shows their income and expenses. With categorisation, clients know exactly where their money is going and are more likely to use the banking app to see how much they spent on coffee, food, transportation, etc. This gives them better control over their finances and makes planning easier.
For banks and fintechs, there are several benefits to this approach. Accurate analysis of customer behavior from payment data improves scoring and allows for a better understanding of customer needs. This creates room for targeted offers and upsells, where you can offer relevant financial products at the exact moment the client needs them. The result is increased customer loyalty and improved business results through personalised service.
Today's customers expect their bank to be more than just a provider of financial products - they want a partner that helps them achieve their financial goals. Be an active player in their financial planning and provide personalised recommendations on how they can improve their financial health.
TIP: Create tools that allow customers to track their financial goals and communicate with them regularly about their progress. Offer personalised products that meet their specific needs. A good example might be recurring payments (subscriptions) that not every institution can easily identify.
Success in digital banking is not just about the number of features, but how often and actively customers use them. Fully engaged customers are more loyal, recommend their bank more often and use more products, which drives revenue per user. The key is to offer customers features and tools that not only make it easier to manage their finances, but also improve their day-to-day experience with the bank.
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Ondřej Machač
Executive officer
