Fidelity in a digital age

In the digital age where the constant rollout of new and innovative services along with rapid adoption and defection by consumers is the norm, does loyalty even play a part anymore? What traits drive loyalty in the modern consumer where competitor products, knowledge, comparison capabilities, and ease of churn place the consumer in the drivers seat?

Beyond more traditional drivers including trust, service quality and value-for-money, it appears that the mobile channel has become a critical success factor in the pursuit of loyalty. According to a recent study from Bain & Company, “omnichannel” customers gave their bank a Net Promoter Score 22 percentage points higher than those who only use physical channels.

The same research shows that loyalty to a primary banking relationship has its limits, with even the most loyal customers still buying new products and services from providers other than their primary bank, 47% and 28% in developing and developed countries respectively. So what’s compelling customers to look for greener pastures?

Unprecedented access to new offerings from non-traditional financial providers which are simultaneously better, cheaper and more personalised than ever before is creating a new landscape with greater choice and flexibility for the consumer. It is not uncommon for the average household to have 16 or more financial products, with very few from the same provider. The downside of all this choice is greater complexity and inconvenience in managing money across multiple institutions.

Does this new management complexity mean that consumers will ultimately forgo better prices, better products and better service in order to return to simpler days? My guess would be no, simplicity itself is unlikely to win over the hearts and minds of even the most loyal of customers. So what is a bank to do, if it is too remain relevant in their role as a primary service provider?

According to a 2014 survey by Ernst & Young, 72% of consumers would pay more, buy more or invest more with their primary service provider if they provided a plan to help them reach their financial goals.

While personal financial management tools provide many of the fundamental features necessary to help customers better manage their money, many systems only support accounts the customer holds with the bank providing the tool. A more valuable approach is to provide these capabilities across all accounts the customer holds, irrespective of institution; a happy and essential marriage of Account Aggregation and Personal Financial Management (PFM).

By providing customers with a complete picture of their finances and the ability to better manage ALL of their money, banks will find themselves in a unique and trusted position as the customers most valued financial services partner.

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