Switching banks is more common than one might think. According to a satisfaction survey conducted by J.D. Power, nearly 13% of consumers are expected to switch their primary bank this year. The most common reasons for this shift include high fees, poor customer service, lack of convenient digital banking features, and better offers from competitors. Is there a way to be a part of the client's life journey indefinitely? Let's find out.
Did you know? A study by Morning Consult revealed that 48% of bank customers switched due to high fees, while 36% cited poor customer service as their primary reason for leaving.
With the world becoming more digital each year, mobile banking apps are taking a central stage in how users interact with their banks. A survey by The Financial Brand found that 67% of consumers now consider a bank's mobile app quality a critical factor in choosing a primary bank. Here are some key features customers are looking for:
Seamless Transaction History: Users expect to see a clean, categorised, and easily searchable transaction history, be it at home after a grocery store visit or while travelling abroad. If they can't find what they're looking for, they might not stick around. Using properly enriched transaction data means banks are giving their clients financial services with more value, which in return gives banks valuable information about their clients´ lives to develop new personalised features. It's a win-win scenario.
Personalised Insights: Chase Media study points out hyper-personalisation and mobile banking are becoming core pillars of modern financial management. Banks that provide tailored financial features based on spending habits can enhance user satisfaction in many other areas. Just imagine, knowing what favourite cafe your client goes to can be easily connected to personalised financial plans, savings options, or VIP cashback offers.
Quick and Secure Transfers: Instant money transfer options, both domestically and internationally, are highly valued. Digital banks like Revolut or Monzo are famous for having easy-to-use money transfer features. According to The Federal Reserve survey, the ability to easily send and receive money is one of the most frequently used features in mobile banking apps since 2022.
Convenient Customer Support: 24/7 access to customer support through chatbots or live agents is essential. Most common inquiries can be sorted out by the AI assistants, while employees take care of the more serious matters at hand. AI also gives banks an ability to be constantly “at hand”, creating a feeling of support and understanding among clients.
Special Features: Extras like nearby ATM locators, eco-tracking of carbon footprint in expenses, and investment tracking tools can set a bank apart from competitors. We live in an environment where people want to care, so leading with education, explanation and motivation can show clients that banks care too.
Banking needs evolve through different life stages, and understanding this through “contextual banking” can help banks become valuable partners to their customers in every important moment of their lives.
Youth and Students: This group looks for no-fee accounts, easy access to funds, and financial education tools. Primary bank for students means unique travelling bonuses, smarter insurance or additional services that go hand in hand with a more active lifestyle. Young people need banks to keep up.
Working Professionals: As they start earning, their needs shift to efficient money management tools, budgeting features, and savings options. Primary bank for working people needs to provide personalised insights to help streamline their cashflow and automated savings to get them prepared for family life.
Families: This stage involves significant financial commitments. Mortgages, loans, and family savings plans become essential. Primary bank for families means personalised loan offers, family budget management tools to help them get their finances in check, and future planning resources for when the kids grow up and start their own life journey.
Middle-Aged and Pre-Retirees: Investment options, retirement planning, and wealth management services become the focus. Primary bank for those clients focuses heavily on contextual banking that provides advice on maximizing investments and planning for retirement. At this stage, the bank already has more family members using their services (parents and students), so joined accounts with various benefits can be a good way to engage further.
Retirees: They require easy access to their funds, low-fee accounts, and investment management. A primary bank should provide them with simple yet effective digital tools for tracking expenses and managing savings.
Imagine a customer who has banked with the same institution for over a decade. Initially, everything seemed perfect, but gradually, several issues affected their satisfaction. This narrative isn't uncommon and often revolves around specific aspects of banking services and digital interfaces.
Firstly, high fees are a significant pain point. Each small transaction - whether it's a monthly maintenance fee, an overdraft charge, or an ATM fee - chips away at the customer's balance. Over time, this steady drain leads them to seek banks offering better deals and fewer fees.
Then there's the challenge of poor customer service. Dealing with serious account issues only to be met with long hold times, numerous transfers, and unhelpful responses is one of the main reasons for bank switch. This lack of efficient support makes customers feel undervalued and ignored, prompting them to consider alternatives.
As we mentioned before, we live in a digital age where most of our financial needs are taken care of through our phones. As such, the lack of advanced digital services can be a deal-breaker. Tech-savvy customers expect seamless online and mobile banking experiences. When their bank’s app is slow, cumbersome, or missing critical features, they quickly turn to competitors offering more polished and efficient digital solutions. Digital banks and fintechs are leading the charge here.
Lastly, we can't forget about security concerns. Data breaches can significantly undermine customer trust. Even if an individual's account remains secure, the fear of compromised data drives them to banks with stronger security measures and more transparent communication about data protection.
“Engagement and emotional attachment to a financial organization is increasingly framing the definition of a primary financial relationship,” - Ron Shevlin, Cornerstone Advisors.
Past several years, customer expectations have shifted significantly. To prevent attrition, banks must focus on delivering seamless, innovative digital experiences and leveraging smart data to provide personalised services.
Seamless Digital Platforms: Modern customers expect their banks to offer intuitive and efficient ways to interact with their finances. With that in mind, mobile and online banking solutions are the main points to focus on. These platforms should feature user-friendly interfaces, real-time transaction processing, and smart financial management tools with support of enriched transaction data with the help of platforms like Tapix. The ability to perform a wide range of banking tasks quickly is the key for customer engagement.
Personalised Financial Services: Utilizing transaction data enrichment, banks can gain deep insights into customer behavior and preferences. The report by The Financial Brand underscores the importance of personalised financial tools that offer tailored product recommendations, and timely alerts about account activities. Personalised experiences create stronger relationships since banks can follow a customer's life journey through contextual banking.
Proactive Customer Support: It's not just about dealing with issues, it's about preventing them. Implement advanced AI-driven chatbots and virtual assistants capable of providing 24/7 support. These digital tools can handle routine inquiries, leaving employees to focus on complex issues. Proactive support, such as notifying customers of potential account issues before they arise, can significantly enhance the customer experience.
Dynamic and Transparent Fee Structures: According to Payomatix report, customers appreciate transparency and fairness in fee structures. Utilizing smart data analytics, create dynamic pricing models that offer competitive rates based on customer behavior and loyalty. Clearly communicating any changes in fees and providing tools to help customers avoid unnecessary charges is a good way to show the customers the bank actually thinks about their needs and understands them.
Enhanced Security with Smart Data: Security remains a top priority no matter how you spin it Leveraging smart data for advanced fraud detection and prevention systems can significantly enhance security, since enriched transaction data are much more accurate and specific, giving a bank more power to protect their customers and avoid future issues. Real-time monitoring of transaction patterns and instant alerts for suspicious activities help reassure customers about the safety of their accounts.
Innovative Financial Products: With customers' needs constantly changing, banks need to be flexible and think ahead. Smart data enables banks to identify gaps in their current product lineup and develop new financial products that meet evolving customer needs. The Financial Brand talks about features like subscription management tools, gamification features to make finances more meaningful, investment advice for business owners, automated savings, and exclusive rewards programs that can attract and retain customers by providing additional value that is focused on them specifically.
To become the bank of choice, institutions must offer a clean and enriched transaction history, personalised services, and smart data utilization. Hyper-personalisation and data-driven insights are the future of banking, and those who adopt these strategies will lead the industry.
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Michal Maliarov
Senior insider
