How to Build Customer Loyalty in Digital Banking | Payments | Cashback Applications
Fintech spend is rapidly growing. Small banks and fintech startups have recognized the moment for digitization and decided to seize it. According to Business Insider, 79% of banks’ IT spend is focused on digital customer experience. As 71% of millennials find having a banking app “very important”, digital banking apps are obviously the future of banks.
Fintech startups are also getting a lot of attention. CB insights research discovered that during 2019, fintech startups from all over the world raised $33.9 billion across 1,912 deals.
However, even though the demand for digital banking is growing, not all users seem to be satisfied. Business Insider research also discovered that 61% of users would change their bank if it offered a poor mobile banking experience.
That’s why banks have to put in a serious effort into creating a seamless customer experience. Only a few years ago, banks had a choice to offer an app like an addition to their offline services. But now, having a functional digital banking app that covers all services is mandatory in order to keep customers.
The problem here is that small banks don’t have the resources to develop a digital banking app on their own. Moreover, they don’t even have the tech knowledge required to develop an app of this kind. That’s why the best way to go for them is to find a tech partner who is an expert in Fintech.
Many banks use loyalty programs to keep users engaged. However, now things have to go beyond that. A simple loyalty program isn’t enough anymore.
As the digital revolution is enabling users to change banks in only a few clicks, those with poor mobile banking experience will be easily left out.
Here’s what to do in order to turn mobile banking users into your loyal customers:
- Keep it simple
Even the most complex financial processes should be presented simply. Customers should go through a straightforward process with logically-sorted steps that don’t allow them to wander. Creating a step-by-step process that doesn’t include other distractions leads the user to their goal, living them satisfied with how efficiently they did what they came for.
For example, Danish startup Coinify made trading virtual currencies an easy and convenient process. Individuals can buy virtual currencies by simply signing up. After that, they get a digital wallet and they can start buying currencies with either payment cards or bank transfers.
Simplicity is very important, especially for extensive processes like opening a loan account or a checking account. The ath Power Consumer Digital Banking Study report discovered that almost 30% of digital banking users had abandoned processes like this. The main reasons for abandonment were that the process was too lengthy (42%) and too complex (39%).
Simple and straightforward interactions are also important for services that users don’t use often. This means that they don’t know the process very well, so they need clear guidance on what to do. Otherwise, you might cause frustration or anger with your digital banking users.
2. Use digital wallets
Mercator Advisory Group discovered that the use of any kind of mobile payment increased from 48% in 2018 to 60% in 2019. Moreover, Apple Pay had 30.3 million users in 2019, taking over the spot of the top mobile payment app in the US from Starbucks with 25.2 million users.
Digital wallets are on the rise, and banks should really care about them. Managing loyalty card programs through a digital wallet makes the user experience much simpler and more convenient. For example, Capital One partnered up with Foursquare to push offers to users when they are at a partner store.
Digital wallets bring banks closer to customers. They allow the use of many different digital technologies, like augmented reality, which makes the digital shopping experience unique. This can increase customer engagement, generate higher revenue streams, and encourage loyalty.
They also generate a lot of valuable user data, which enables banks to track customer behavior and respond to it. What is more, digital wallets allow banks to have control over payment data, protecting users and their transactions from frauds.
3. Efficiency and transparency
The features of the digital banking apps should cover all possible aspects of a user’s financial life. Of course, there will still be things that users can do only in-person, but everything else should be included in the digital presence of the bank.
Customers find greater value with financial institutions that streamline all the financial products they need than with those who offer only parts of the experience and still require a lot of offline actions. The Balance listed Ally Bank’s app as one of the best digital banking apps. This app only needs your fingerprint to show you your transactions, mobile check deposits, ATM locations, bill pay, and even interest checking accounts and stock market news.
When it comes to all these services, the digital banking app also has to be transparent. Finances are a very sensitive topic and users have to know everything. They should easily be able to find their credit scores, interest rates, mobile deposits, as well as terms and conditions. Otherwise, users might lose trust in the financial institution.
4. Personalize the experience
Personalization is king. One in two customers says they would like to receive personalized financial advice like reports on how they spend or tips on how to manage money.
Personalizing the digital banking customer experience means listening to your customers and delivering services that they really want. For example, the Bank of Ireland started using tagging and tracking tools to extract data that helped them personalize customer experience on digital channels. This resulted in a 278% growth in digital application submissions.
Another example is the Polish Bank Zachodni WBK’s NEO Intelligence project. The bank uses AI to analyze customers’ social network profiles and identify their behavior in their communities. Thanks to this data, it then shows them personalized offers and targeted information that’s relevant to their profiles.
Conclusion
Business Insider reports that by 2021, banks will grow their IT budgets to $297 billion, which is 14% higher than in 2018. This means that financial institutions have understood the importance of innovation. If only a few years ago it was a choice, now it’s an obligation.
These tips should encourage you to think beyond a traditional banking system and find more creative ways to create long-term customer relationships. The only way to stay competitive is to bring in innovations that adjust your processes to the digital world that we live in.
Good customer experience can make small banks serious competitors to big national banks. It can completely change the image of the bank, building strong relationships with loyal customers.
If you want to leave the development to a team of experts and focus on customer retention, reach out and schedule a call with our CTO or our Business Development Team!
