Banking on customer loyalty: how can banks and financiers improve their retention strategies?

Long gone are the days of speaking to someone in a suit behind a piece of glass to withdraw money. Challenger banks, neo banks, and the natural rise of fintech have really shaken up the market over the past five years and shown that you can get a great experience from your financial provider - whether you're a business or consumer.

With fintech providers popping up from every corner of the globe and offering a brilliant customer experience through slick digital journeys and instant customer service, traditional high street banks are now expected to deliver the same level of service but with less agile systems. If banks want to keep customers loyal, they need to provide a service that takes this agile approach – anything less just won't cut it.

However, some providers are being left behind. So it was no surprise when our latest research uncovered that almost a quarter of consumers admit they're not loyal to their bank/financial services provider, while just one in five feel their bank values them as a customer.

After reaching out to 2,000 UK consumers, we also found that just 18% believe it pays to be loyal to their bank/finance provider, with those surveyed noting good customer service, trust, and reliability as the biggest factor in their decision to stick with a provider.

What's more, the data shows that over 12 months, the average consumer spends £140 on banking/financial services (not including big-ticket purchases such as mortgages and loans etc.). They're typically loyal to their provider for seven years, and less than half (40%) have been a customer at their bank for more than 10 years.

While the new approach to banking is exciting, different, and wholly necessary, it tends to be harder to retain customers than it was a decade ago – especially for traditional institutions. It's not necessarily people switching providers that's the problem for banks – many customers now keep hold of their old accounts but open several others with a range of providers to fulfil different requirements. The problem here is that one person's custom is now typically split three or four ways, rather than just one.

Countless innovations in recent times make customer loyalty more and more difficult for banks to hold onto, as customers shop around to make the most of new offerings and diversify where they put their money. With this only set to increase over the coming years as fintech continues to thrive, financial services firms would be wise to consider their customer experience and loyalty strategies now and get ahead before it's too late.