Banks and loyalty: The youth are here to disrupt and restructure

The younger generation have expectations. One-size fits all loyalty programs are out and tailored rewards are a hugely important way to build meaningful relationships with younger customers. But is it enough?

Not at all. Loyalty is no longer just about points and preferential rates; it is about CX and this begins at first contact – namely, onboarding. Account switching incentives are the first step, but every interaction is a chance to further cement your customer’s loyalty and if you aren’t capitalising on this, you can be sure that other FIs are. Especially neobanks who have got the account switch/ onboarding processes down to an artform.

FIs can’t count on customer’s loyalty once they have been onboarded either. According to a study by Nettra, churn is highest (25%) in the first year. In order to minimise the risk of abandonment and to increase customer staying power alongside ensuring that the customer journey is intuitive, there are a few simple things that can be done:

Keep communications simple – Don’t make anything around money confusing. Your customers need frictionless access to clear and concise information. Be visual – often charts and graphs can say a million words when it comes to explaining spend or money management tools.

Built trust through transparency – When you cross-sell and upsell, be clear about any associated costs or fees. Poor communication can destroy years of trust. Engage with your customers, offer them real-time money movement notifications, make sure customer services (whether in-person or chatbots) answer any questions or queries accurately, and be clear around data security. A recent Morning Consult survey found that data protection is the most important factor in the decision to switch banks.

Make rewards easy to redeem – Even the best loyalty program can lose its appeal if the rewards are buried under a long list of rules or essay-style descriptions. For rewards to hold value they need to be both relevant and easy to access. Remind your customers when perks are available and when they have rewards to redeem.