Financial institutions, much like other industries, have been impacted by technology and advancements that provide consumers a wide range of services on demand and from the comfort of their homes.
With access to in-person, online and mobile app banking options, marketing campaigns centered on what banking customers value is more important than ever. Not unlike retailers and brands looking to attract and activate today’s dynamic shopper, banks, too, must get to know their customers’ wants and needs to build loyalty as well as attract new customers.
Winning a consumer’s loyalty is an important component to sustaining and growing business. Look around and you see all types of businesses incorporating loyalty marketing programs into their strategy. But what about financial institutions, like banks? How do they build loyalty? The majority of promotional activity from financial institutions is primarily focused on driving checking account acquisition. This is quite necessary in a competitive industry and an environment where consumers have easy access to research options, via the internet. And they certainly do their homework, 93 percent research when opening a CD or money-market account and 91 percent when switching banks.
New research based on data from more than 1,700 respondents, found 30 percent of consumers don’t feel much loyalty to their bank and can be readily influenced to switch. In fact, nearly 10 percent plan to switch in the next year, with this number growing to 26 percent for millennial parents and 19 percent among millennials. This presents a prime opportunity for banks to influence these potential customers by catering to their banking needs.
So what drives consumers to switch banks? Surprise – it’s not just a major life event, like change in family status, size or location. Savings wins with 45 percent of respondents indicating better rates as their primary reason to switch, followed by a major life change influencing 29 percent to switch their primary bank Interestingly, 27 percent switched for better promotional offers and 24 percent for more convenient branch locations. There is an opportunity to influence through targeted, personalized advertising that also appeals to the pocketbook.
Keeping customers isn’t the only challenge banks face. When it comes to products like auto, mortgage or student loans, customers are willing to go outside of their primary bank. Rates are the primary reason but 50 percent of respondents cite security as a reason to seek a loan from another institution. That’s not surprising with all of the data breaches we have experienced in the last few years. Customers need to trust their account information will be protected!
It is imperative that banks take all of this into consideration when formulating a marketing strategy in 2019. It is essential for banks to listen to their customers. Next, they must make a concentrated effort to build loyalty. How? Competitive rates, regular promotions, and excellent service are key.