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Today, the financial world is all about mobile-first convenience. Opening a new account has never been easier. Yet, while an efficient account-opening process gets your foot in the door, it doesn't guarantee a meaningful and, most importantly, long-lasting relationship. The real challenge lies in ensuring that new customers don’t just open an account and fade into inactivity but instead evolve into loyal, profitable clients.
According to the 2024 Javelin Strategy Report on digital onboarding, financial institutions must move beyond the traditional welcome email or debit card PIN setup. Banks must engage customers continuously, guiding them through the various services available, cultivating habits, and establishing themselves as the customer’s primary financial institution.
Effective customer engagement begins with understanding the different levels of interaction that customers have with their financial institution. Not all customers engage equally and you can usually differentiate them into three primary engagement categories - Fully Engaged, Active, and Inactive.
Fully Engaged - Fully engaged customers, let’s call them fans, represent the most valuable segment for any bank. According to Javelin’s Digital Engagement Index, they take up the top 20% of digital usage. They are characterized by their use of multiple products (holding an average of 3.5 products) and engaging with their bank through digital tools like bill pay, direct deposit, and mobile wallets. They are twice as likely to swipe their PFI debit card compared to less-engaged users, and 87% of them rely on direct deposit.
Active - Active customers fall into the middle 50% of the Digital Engagement Index. They regularly use digital banking but are not fully integrated into the ecosystem. They utilize basic services such as online account monitoring or digital transfers, but they haven’t yet committed to the bank as their financial hub. This might be a customer who checks their account balance weekly and occasionally transfers funds but uses other providers for loans or retirement accounts.
Inactive - Inactive customers, making up the bottom 30%, log in sporadically, if at all, and their use of the banks’s digital services is limited to basic functions. They might receive their paycheck via direct deposit but rarely engage with the bank’s digital offerings. It’s a customer who logs in once a month to ensure their paycheck arrived and makes the occasional ATM withdrawal without leveraging other digital features.
There are, however, several other factors banks can’t ignore while approaching customer engagement. According to Gallup research, emotional factors comprise up to 70% of economic decision-making. As such, let’s look at two more highly important categories for raising and keeping the engagement.
Emotionally Connected Customers - The emotional connection customers feel toward a brand is a key driver of engagement no matter how you spin it. These customers are not only engaged because of frequent usage but also because they have developed an emotional attachment to the brand. Emotionally connected customers are more likely to remain loyal, recommend the bank to others, and be less price-sensitive. Customers view their bank as a partner in financial management, utilizing tools like budgeting advice, personalised financial plans, and long-term savings goals.
Transactional Customers – On the other side of this spectrum, there are customers who use digital tools primarily to complete routine tasks like checking balances, transferring funds, or paying bills. Their engagement is purely technical and they lack any emotional connection to the bank and its services. The key here is to create a strong bond with more personal features. And that cannot be done without properly enriched transaction data from providers like Tapix, that offer more accurate and precise insight into customer´s financial lives.
Digital engagement plays a critical role in transforming account openers into profitable relationships. Most digitally active customers use more products, engage with their bank regularly, and are more likely to make their bank their primary financial institution. It’s also the audience that heavily uses features like personalised customization, contextual banking or PFM platforms. All tools that can be used to sway active and inactive groups in the right direction.
While many digital banks have developed strong customer acquisition strategies, they often struggle to become their customers’ primary financial institution. The excitement of signing up with a sleek, mobile-first interface and seamless onboarding process doesn’t always translate into long-term engagement or customer loyalty. For example, banks like Revolut and Monzo attract millions of users with appealing features like fee-free foreign transactions, but many customers still rely on traditional banks for core financial services like salary deposits, loans, and mortgages.
According to a 2023 McKinsey study, although digital banks are seeing rapid customer growth, only 10-15% of their customers use them as their primary bank. This lack of full customer adoption is a major hurdle in profitability, as customers tend to reserve critical financial activities for their traditional banks, while using neobanks for secondary purposes. Without continuous engagement and demonstrating added value, customers may not feel confident in shifting their primary banking activities to these digital-first players.
While focusing on deepening customer engagement, measuring KPIs (Key Performance Indicators) becomes essential to understanding what strategies are working and where improvements are needed. Metrics such as app usage frequency, product adoption rates, and customer retention provide insights into how engaged customers are and can be called a first step towards better engagement. After calculating what customers respond to and what is not needed, it is much easier to course-correct and use one critical component we mentioned earlier – enhanced transaction data, which helps banks focus on the features that drive the most meaningful engagement.
Important KPIs to track for banks are Net Promoter Score, Retention Rate and Feature Adoption Depth.
Simply put, banks need to shift their focus from basic onboarding to ongoing, data-driven strategies that continuously nurture and guide customers into deeper relationships. Access to enhanced transaction data is crucial for effective engagement targeting. The reason is clear - without accurate, personalised data, banks lack the necessary insights to focus on the right engagement strategies. Precise customer-oriented data allows for more tailored and impactful interactions, helping build stronger, more profitable relationships.
While this is a long-term commitment, there are several bullet points banks can follow to make sure their hunt for engagement goes in the right direction:
Personalization plays a key role in enhancing digital engagement. Customers are more likely to interact with a bank that understands their unique financial behaviors and provides tailored services. For instance, Monzo’s approach to delivering personalised annual reports allows customers to visualize their spending and savings trends. This kind of feature builds trust and loyalty by demonstrating that the bank truly understands its users’ financial needs.
However, personalisation goes beyond annual reports. Many banks, such as Revolut, leverage machine learning and AI to provide personalised insights and recommendations. AI-driven tools analyze transaction data to offer actionable financial advice, like recommending investment opportunities.
Digitally inclined financial institutions are embracing gamification to engage younger, tech-savvy users. Gamification, which involves applying game-like mechanics to non-game contexts, has proven to be an effective way to keep users engaged with financial services.
For example, digital banks like Revolut have introduced milestone-based achievements and savings goals that reward users for consistent app usage or reaching specific financial targets. This approach taps into the competitive and reward-driven nature of younger generations, creating a sense of achievement when customers meet their goals. Gamification encourages more frequent interaction with the banking app, leading to much higher usage rates, better reviews and positive feedback.
The importance of push notifications and alerts in keeping customers engaged is obvious. While basic transaction alerts are helpful, the most successful banks are moving toward enriched notifications, such as providing detailed information about spending categories or merchant names, as Twisto and Revolut have implemented. These enriched notifications not only help customers track their spending in real-time but also provide a layer of security by helping users identify unauthorized transactions immediately.
The key to this strategy is delivering meaningful, timely insights rather than overwhelming customers with irrelevant or redundant alerts.
Another key differentiator that many digital banks are capitalizing on is subscription management. With consumers subscribing to multiple services - ranging from streaming platforms to subscription boxes - tools that allow users to manage recurring payments are becoming more valuable. Banks such as Starling offer features that track subscription payments and help users cancel unwanted services. For this, subscription labelling is vital.
By giving customers greater control over their recurring expenses, banks can position themselves as primary financial institution rather than just a service provider, offering customers a good way to manage their daily spending and monitor all expenses through the app, giving them more reasons to regularly return.
While many emphasize the need for deep digital habits like bill pay and mobile deposits, other experts suggest that financial wellness tools are equally crucial for fostering engagement. Digital bank Chime introduced budgeting tools and goal-setting features that empower users to take control of their financial health. With a little guidence, of course.
Chime’s "Save When You Get Paid" feature, which automatically transfers a portion of the user's direct deposit into a savings account, encourages savings behavior without requiring active customer participation. Similarly, N26’s "Spaces" feature allows users to create sub-accounts for specific financial goals, such as saving for a vacation or building an emergency fund. These tools are valuable not only because they increase engagement, but because they help customers feel more financially secure and empowered, fostering long-term loyalty.
Fully engaged customers are what make or break a profitable bank. They hold more products, swipe their debit cards more frequently, and are significantly more likely to recommend their bank to others. By focusing on ongoing onboarding - through direct deposit switching, habit formation, and financial goal alignment - banks can transform new account holders into long-term, loyal customers.
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Michal Maliarov
Senior insider
