Key Takeaways
- Retention is king. Focus on keeping existing customers happy—it’s more cost-effective (and profitable) than acquiring new ones.
- Use data to understand customer needs and personalize products, services, and communication.
- Leverage multiple platforms to gain deeper customer insights and improve retention.
By now, everyone’s heard this piece of business advice: retaining existing customers is more cost-effective than acquiring new ones. What may be news to you is it can be as lucrative as it is affordable. By prioritizing customer retention, banks can unlock significant opportunities for growth and profitability. This guide shares 10 strategies to improve customer retention in banking. Discover how to transform your bank into an organization that inspires loyalty.
10 Customer Retention Strategies for Banks
1. Personalized Services
Analyze customer data to offer products and services tailored to your customer’s individual needs and financial goals. This can be loans aligned with your customer’s aspirations of buying a house, or investment advice that considers their risk tolerance. Beyond financial products, personalized communication is a great tool. Use customer data to send messages and special offers that resonate with your customer’s specific needs so they feel valued and understood.
2. Digital Transformation
Convenience is king in our digital world. Build a user-friendly online and mobile banking platform that allows customers to manage their finances anytime, anywhere. Use dacadoo to personalize the experience further—motivate customers with health challenges and use data to create cross-selling opportunities. According to a Deloitte report, 69% of brands that deliver personalized experiences improved customer loyalty and customer lifetime value.
3. Financial Education
An informed customer is a loyal customer. Workshops, seminars, and educational content in the form of articles and videos give customers the ability to self-manage their money and plan for the future. Empowering customers to make informed decisions strengthens your relationship and reputation as a trusted financial advisor.
4. Data Analytics
Utilize analytics to understand customer behavior and preferences. Look at data from various sources for a holistic view of your customers—combining transaction data with demographic information, website behavior, and health and lifestyle data from your health engagement platform. Identify at-risk customers and develop targeted retention strategies based on these insights, like incentive-driven cross-sells.
5. Customer Engagement
Your customers want to engage with you beyond banking. A Gallup poll found that fully engaged banking customers bring 37% more annual revenue than actively disengaged customers. Traditional bank-customer touchpoints like in-person, phone, online, and in-app support should remain firm as your baseline, but there’s always the opportunity to introduce a new avenue for engagement.
Digital health platforms like dacadoo take a lifestyle-focused approach to well-being, with engaging features that complement your customers’ financial goals. Regular surveys and feedback mechanisms also give your customers a voice, helping you improve your products and ensure they’re aligned with what your customers truly want.
6. Relationship Management
Regular check-ins with account managers ensure your customers receive continuous value, creating a sense of partnership and exceeding expectations. High-value customers should have account managers to provide personalized service and ongoing guidance as their financial needs evolve. These dedicated managers can become trusted advisors, offering proactive support and ensuring the customer feels they’re in safe hands.
7. Competitive Products and Rates
Cost has always and will always matter. While good customer service and digital support are important, customer retention hinges on your customer’s perception of value. While interest rates may not be easily adjusted, you need to ensure your overall product offering and services are a compelling reason for customers to stay. Offer competitive rates where possible, and drive it home with innovative new products and wealth management tools to cater to evolving financial needs and preferences across diverse customer segments.
8. Customer Service Excellence
Well-trained staff are crucial to a positive banking experience. Unfortunately, according to IBM, only 17% of centers can find and recognize problems that negatively impact the customer experience. Invest in staff training to make sure customers can trust your team to handle inquiries and problems efficiently and with a solutions-oriented approach. Multichannel support (phone, email, live chat, social media) also caters to diverse customer preferences and ensures accessibility on their terms.
9. Transparency and Trust
Customer retention is built on relationships, and relationships are built on trust. Achieve this through clear communication of fees, terms, and conditions. Leave no room for misunderstandings—provide detailed product information in plain language to create the financial literacy customers need to ensure they understand the products they use. Transparency and security go hand-in-hand, so invest in robust security protocols to protect customer data and instill confidence in your systems.
10. Community Involvement
Participate in community service and environmental initiatives, demonstrating a commitment to a positive social impact. Engage with the local community through events, sponsorships, and partnerships to build deeper connections. Take it digital by incorporating it into your app offering—dacadoo is a health engagement platform that allows customers to connect with friends and colleagues for support and motivation.
Examples and Case Studies
Banco BMG: Boosting Sales and Retention Through Analytics
One of Brazil’s major retail banks, Banco BMG, saw the challenges of the pandemic and prioritized a seamless customer experience across all channels. To improve retention, they analyzed 100% of customer interactions and pinpointed agent behaviors that most impacted customer satisfaction and retention. Real-time data on common objections and effective sales tactics gave agents actionable insights. This data-driven approach led to a remarkable 500% increase in customer retention.
Citigroup: Relationship Management in Australian Wealth Shift
Citigroup’s Australian strategy emphasizes retaining both high-net-worth clients and top private banking talent. By exiting the mass market after the royal commission and focusing on wealthier clients, they’ve seen a 32% surge in assets under management and a 27% increase in private banking staff. This success hinges on attracting skilled relationship managers with multilingual expertise and offering a wider range of investment options—a client-centric approach that fosters loyalty. Citigroup’s high retention rates for both clients and advisors demonstrate the effectiveness of this strategy.
Cathay United Bank: Personalized Services Driven by Data
Cathay United Bank, a leader in Taiwan’s digital space, prioritized customer retention through personalization. They leveraged data to understand individual needs, e.g., loan options tailored to customers’ interest rate priorities, not just the bank’s default. This data-driven approach fostered customer connection and loyalty. By analyzing user journeys, they identified areas to improve the banking experience, leading to a 20% retention rate increase.
How dacadoo Helps Banks Retain Customers
It’s clear that banks need to leverage digital platforms to truly connect with their customers. This is not a novel idea, but there are numerous ways—with varying successes—to put it into practice. The best companies expand their reach beyond traditional channels, leverage more data, and personalize interactions for better customer satisfaction.
dacadoo helps banks differentiate their brand with our Digital Health Engagement Platform (DHEP). Center health and wealth management to your brand and create loyalty through personalization and incentives. Book a demo today and see how you can transform your approach to customer retention.
