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Critical Success Factors for Financial Services to Retain and Attract Customers
Critical Success Factors for Financial Services to Retain and Attract Customers

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Customers have intrinsically been at the heart of financial institutions. A larger customer base automatically spells more business for a financial institution, and hence, retaining clients today has become just as critical as acquiring new ones within this space.

Customer retention in this sector can be seen as a cost-effective strategy compared to acquisition, given the competition involved and customers’ inclination to switch service providers depending on preference. The advent of digital services has further intensified the competition within financial services players by providing a level playing field for newer players to grab a piece of the pie.

Research suggests that 73% of customers globally engage with multiple institutions beyond their primary service provider, and around 58% availed of a financial service or purchased a new product from a new service provider in the last 12 months. Digitalization has made financial services more transactional, and the lack of differentiation is increasingly compelling customers to engage with multiple financial institutions.

Taking a Step Beyond Loyalty – Building Brand Advocates

To remain competitive, financial institutions must revisit their traditional customer retention strategies and look towards building strong brand advocates. This can be one step beyond loyalty, where institutions can make their customers feel valued by creating long-lasting relationships.

Research reveals that those institutions with the highest customer advocacy scores (20%) witness 1.7x faster revenue growth. So, what’s the secret? Here are the top five success factors that financial institutions must aim for to retain and attract customers in the long run and build long-standing brand advocates.

  • Focus On Customer Journey Mapping to Understand Who They Are

Financial institutions must utilize the wealth of customer data they have at their disposal to closely understand customer behaviors and journeys. Mapping a customer’s journey can be a great first approach to understanding and enhancing a customer’s overall experience across every critical touchpoint. For instance, banks should capitalize on Digital Experience Intelligence (DXI) on a larger scale to better understand their customers. The insight synthesized from every touchpoint interaction with banking interfaces can help banks visualize, analyze, and contextualize how customers behave while interacting with a particular piece of a mobile banking app or website.

  • Personalizing Is Over, It’s Time to Embrace Hyper-Personalization

According to a study from McKinsey, more than 70% of consumers expect some level of personalization on the products and services they avail. And some of them will even shift to a different service provider if the personalization levels do not manifest. A step beyond personalization, hyper-personalization can be a powerful business differentiator, and financial institutions have a chance to capitalize on it by having the first mover advantage. To achieve hyper-personalization at scale, financial institutions must gain a deeper understanding of their customer beyond the regular demographic data. Instead of segmenting customers into groups, institutions should adopt a single ‘customer genome’ approach based on factors like age, ethnicity, lifestyle, and gender captured at an individual level. By creating machine learning models fed by this data, financial institutions can understand customer needs at a granular level and deliver experiences that strike a chord with customer behavior.

  • CX Is Not Just Better to Have, It’s A Must-Have

Customers today expect a seamless digital experience, and any disruption can broadly threaten to undermine their trust in a particular institution. Hence, financial institutions must maintain a seamless experience across all key touchpoints, whether an app or a website. Services and products delivered across channels should be dealt with as a value driver to ensure meaningful and seamless interactions. Beyond the technical health of a communication channel like an app or a website, maintaining usability is critical. For instance, with an AI-driven analytics platform, CS professionals can access real-time session replays of customer journeys. These replays can provide first-hand accounts of the challenges faced by customers and help pinpoint the exact touchpoints that frustrated a customer and compelled him/her to abandon the purchase journey altogether.

  • Listening To What the Customers Have To Say

Financial institutions must ensure that their customers have a direct path to follow when providing feedback about a specific product or service. This is where real-time voice-of-customer (VOC) tools, such as surveys or interviews, can help financial institutions gauge customers’ sentiments and act accordingly. Listening to feedback and addressing it can go a long way in assisting financial institutions to make necessary process improvements that result in increased brand loyalty and retention.

In today’s competitive financial landscape, institutions must prioritize critical success factors to attract and retain customers. As customer expectations continue to rise, only those institutions that proactively adapt and invest in technology and human connection will sustain long-term growth. Ultimately, success lies in understanding customer needs, fostering reliability, and continuously evolving to exceed expectations in a dynamic environment.


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