Why Customer Loyalty Matters to Banks
- By Paul Mah
- August 26, 2022
This interview was conducted with Standard Chartered Bank’s Real-time Interaction Management (RTIM) team in Singapore.
“The ultimate goal in financial services in recent years has shifted to supporting the customer’s financial wellbeing as opposed to fulfilling ad hoc financial needs,” according to the real-time engagement team at Standard Chartered Bank.
The team was referring to today’s digital landscape and how forward-thinking banks are now focusing on enriching the lives of their customers. This will only happen when banks build trust and roll out innovative digital-first services to meet customers’ needs “anytime and anywhere”.
A new generation of banking customers
There is no question that the financial services and insurance sectors are facing the largest generation of digitally savvy consumers in history. But while serving this new generation of customers who make their buying decisions predominantly through nontraditional platforms starts with a great banking experience, it should not end there.
“We want to deliver easy, everyday banking solutions simply, conveniently and through it, offer a great customer experience. We are also taking a disruptive approach to partner with the industry’s leading players to offer innovative products and solutions. Besides serving their daily banking needs, we help our customers to manage and grow their wealth by offering personalized wealth advice,” said Standard Chartered, noting that Singapore’s banking sector is one of the most competitive, vibrant, and innovative in the region.
“There is an extensive representation of local and international banks, as well as upcoming new digital banks and a wide range of big and small players, including fintechs, providing a comprehensive range of financial products and services. This makes Singapore’s banking sector very diverse.”
The vibrant ecosystem offers the opportunity for banks to pilot new technologies and innovate with experimental capabilities, which in turn leads to even more opportunities in the market. And while the small size of the domestic market means there is a limited pool of customers for players to tap on, Singapore serves as a good base to reach other markets in the region.
Rewarding loyalty
Banks are always coming up with different offers to attract new customers or innovating new products to better serve existing customers. However, the market is not as mature when it comes to rewarding long-term customers, particularly in the mass retail segment.
According to Standard Chartered there is a growing opportunity for banks to grow customer loyalty not just through financial rewards, but also through further personalization, and enhanced customer experience and service.
Khachig Kabakjian, Global Chapter Head, Real-time engagement, Standard Chartered Bank will be speaking at an upcoming event in Singapore by CDOTrends and Pegasystems titled “AI & Beyond: The Future of Customer Journeys in FSI” on 8 September 2022 from 12.00 noon to 2.30pm.
You can register your interest for this event here.
Moreover, the competitive nature of the retail banking market means that banks have multiple ongoing promotions to attract customers at any point in time. This can cause fluctuations in customer loyalty as they switch banks to take advantage of the seasonal offers.
The topic of customer loyalty is an increasingly important one. A recently released study “Treat customer loyalty like royalty with personalized CX” on the state of banking in Singapore by market research firm Omnipoll and sponsored by Pegasystems found that two in three respondents (68%) agreed that their bank should stop trying to sell them new products and services and start rewarding their loyalty.
The findings of the report suggest that a proactive, nurturing approach to recognizing long-term customers is needed. To prevent massive capital outflows – noteworthy given the growing presence of high net worth individuals in Singapore – the pressure is on to ensure that customers and their children choose to keep their wealth with an institution.
The future of personalization
What are some barriers stopping banks from personalizing offerings to existing customers and rewarding them for their loyalty? According to Standard Chartered, the barriers to achieving customer-centricity come down to legacy systems, legacy processes, and mindset.
Banks have over the years deployed systems to better engage customers across disparate channels and provide a more transparent and seamless experience. While hardly an easy task, banks now have their work cut out for them in the face of rising customer expectations.
“What customers expect today is very different from what they expected a decade or two ago. They are now expecting banks to provide an omnichannel experience, like a social media platform. This expectation increases the urgency for banks to connect all their data points and systems with the customer touch points through a logical and seamless structure,” said Standard Chartered.
So how is Standard Chartered approaching this? “Our journey to transforming our systems and processes to deliver an omnichannel experience for customers has highlighted the importance of the right mindset to deliver for customers. We believe that delivering superior customer experience must be premised on knowing the customer’s life stages and needs, or journey, and being there to offer the right solutions and advice.”
“Customers are experiencing the world at their fingertips. They expect their bank to anticipate their needs and be there to offer the right solution to meet these needs. With each interaction, they also expect better service, and a simpler and seamless experience.”
“Using machine learning and other data-centric tools to better understand customers and provide the most relevant solutions is ever more crucial to help [banks] look after their customers’ financial wellbeing and be their trusted financial partner,” the team summed up.
Paul Mah is the editor of DSAITrends. A former system administrator, programmer, and IT lecturer, he enjoys writing both code and prose. You can reach him at [email protected].
Image credit: iStockphoto/fizkes
Paul Mah
Paul Mah is the editor of DSAITrends, where he report on the latest developments in data science and AI. A former system administrator, programmer, and IT lecturer, he enjoys writing both code and prose.