Capitalizing on customers’ loyalty for higher revenue: “Make it Easy, make it Mobile”

August 31, 2016

Bain & Company recently surveyed 14,812 retail bank customers in Australia, Canada, the UK and the US. The outcome? A insightful study, Just Make It Easy, A Guide to Loyalty in Banking,  that summarizes the key to loyal, happy, highly valuable customers: “The code that reveals the connection between consumers’ bank interactions and their loyalty to those banks has been cracked…. Just make it easy …Making it easy means, in part, making it mobile.”

Bringing traditionally time-consuming and cumbersome processes such as identity verification for account opening purposes to the mobile channel means that these formerly burdensome procedures turn into convenient, fast and delightful experiences.

Make it easy through mobile-first design. Everyday banking is still held hostage to traditional branch and contact center channels. For most banks, we estimate that 60% to 70% of teller transactions are bad (because of errors or rework) or avoidable (because they would be quicker, easier and cheaper through digital channels).  Such transactions should be migrated to digital channels.”

“Of any single interaction, a sales interaction has the greatest influence on a bank’s loyalty score. For example, 68% of US customers who had a good experience opening a credit card, 74% who did for a new mortgage and, 80% who did when opening a checking account said that they would be more likely to recommend their bank.”

Raise the bar in creating delightful sales and service interactions. Rare though they might be, sales and service interactions have a marked effect on loyalty. Here too, customers increasingly expect a seamless experience, whether digital, in person or on the phone,” advises Bain & Company.

Although digital sales and service transactions do not yet consistently delight more than digital routine transactions, that situation will likely improve over time as banks streamline their digital processes and build greater mobile sales and service capabilities, advances the study conducted by Bain & Company.

Make it secure, make it mobile: ideal mobile onboarding strategies include digital ID verification

Additionally, an ideal mobile account opening strategy balances the user-experience expectations of mobile-first customers with the compliance and fraud management requirements of the financial institution. In other words, making your customers feel secure when using your products and services is another cornerstone to increase their loyalty to you and, eventually, pushing your revenue even higher.

But, how can banks and financial services check all the boxes when it comes to provide a fast, secure, and delightful experience that not only attracts new customers to open new accounts but keep them coming back for more services?

For Mercator Advisory Group, this is a simple question that requires a simple answer: “this requires an elegant approach to process design, with an emphasis on technologies that can simultaneously improve the user experience and strengthen risk mitigation efforts.”

So we are back to square one: make it easy; make it mobile. But also, make it secure, make it mobile.

“Banks and credit unions will need to enable mobile account opening, or they risk losing new accounts to competitors (both traditional and alternative) who are ready for this mobile-centric acquisition environment. The challenge that FIs need to meet is designing a mobile account opening process that is both seamless for the applicant and safe for the institution,” warns Mercator Advisory Group in their white paper Mobile Account Opening: Solving the Convenience-Risk Conundrum. 

Monthly revenue increase for users of digital banking doubles that of non-digital users

Despite the challenges posed by the migration from traditional services to digital banking, data highlighted in the Digital Engagement Intensity Study conducted by Fiserv and Bank of the West show how following enrollment in digital banking, monthly revenue per customer increased by 10.7 percent, compared to a 4.5 percent increase for non-digital users during the same period.

This study equally concludes that higher engagement drove higher value. Among highly engaged customers – defined in the study as those who have the longest tenure, make the most transactions and generate the highest revenue -, average monthly revenue jumped 13.1 percent after digital enrollment.

Likewise, Forrester points out that 66% of financial executives polled in a late 2014 survey said that acquiring new customers was their top strategic objective for their loyalty program. On the other hand, just 56% said customer retention was their top objective.

Majority of analysts agree with Bain’s statement that mobile access also has more potential than the branch to delight customers in sales and service interactions, particularly when the mobile channel is fast and easy to use.