Approaching a new era in banking loyalty

Approaching a new era in banking loyalty

/ 04:55 PM June 24, 2022


A popular internet quote says that we may be masters of thought, but we are still slaves to emotion. It may sound cliché, but it’s the reality in many situations. But does it have anything to do with finance and loyalty? More than it appears at first.

The pandemic has brought many negative effects on various industries. For banks, it has meant phasing out physical presence. According to an analysis by the National Community Reinvestment Coalition, more than 4,000 branches have closed in the U.S. since March 2020.

This has forced the financial industry to not only develop a new model for collecting information about customers, their needs or their living situation. It’s also about finding a way to act on their emotions, be close to their dreams and goals, and minimize the inconvenience of the lack of the human factor — and thus build long-term loyalty.


Many faces of loyalty

Simply put, we can distinguish 3 types of loyalty:

• Rational loyalty — based mainly on transactions, i.e. customers are loyal as long as the points or rewards are favorable and encouraging for them — It pays off, so I use it;

• Behavioral loyalty — assumes that customers make the same purchases based on convenience and repeatability. So loyalty becomes the result of pragmatics, not individual positive feelings — Quality is good, so why change?;

• Emotional loyalty — consumers do not buy based on incentives, but rather on a bundle of emotions: customer service, trust and the customer journey experience. Importantly, this approach makes customers virtually immune to the competition. They stay loyal to the brand, even if the competition’s offer is more attractive — Maybe another offer is cheaper, but I remember that they helped me when I was in need.

Emotional loyalty means a deeper level of brand engagement, as it goes beyond economic incentives. But how to build this kind of relationship in finance that appears to be equally based on economics and rationality?

It’s a matter of principles

banking loyalty finance

Customers are people and their motivations are human. They want to be seen by the bank through the prism of their humanity. The bank must learn about their customers’ values and interests and offer them solutions that are most consistent with their beliefs. It is no longer enough just to personalize the product — what is now needed is personalization of values.

According to a PwC study, 62% of older millennials choose products based on origin transparency. Millennials and Generation Z are also more likely to choose a bank that aligns with their values and helps them achieve their financial goals.

With this knowledge, financial institutions can become closer to their customers than ever before — using communication via social media or creating a space where they can express their commitment to matters that are important to them.

Deloitte indicates that 90% of Americans confirm that money affects their everyday life and their stress level. By supporting financial well-being and providing customers with guidance on, for example, budget management, the bank can build unique relationships with customers.

There is still a human being on the other end

This is well illustrated by the outright explosion of digital solutions at the beginning of the pandemic: the lack of proper onboarding or alternatives to the digital may have discouraged, for example, the baby boomers generation from continuing their journey with the bank. Technology oversaturation can lead to a sense of alienation or even a loss of uniqueness and importance — if I’m less mobile, am I also a less valuable customer? To keep customers from feeling this way, it is important to offer alternatives, even if they seem less convenient, slower, or a bit archaic: give them the ability to chat with a person instead of a bot, or to visit a branch in person.


With all this in mind, it’s easy to note that building loyalty today is a multi-level game. Times have changed — it’s not the customers who are supposed to collect points in order to exchange them for rewards, but rather the opposite. It’s the financial institutions that are now supposed to go through successive levels of getting to know better and appreciate the customers more, in order to win their positive emotions, attachment and loyalty. This game, however, never stops and is bound to become increasingly more complicated.

Banks need to learn how to approach this new era of loyalty and how to use the information they already have. Only this way they will be able to reach all generations, microsegments and customers. Technology is the best ally of the banks, and the best practice of strong partners is to help build strong emotional connections, adding to them uniqueness and personal dimension.

Written by: Justyna Piotrowicz, Business Solutions Consultant at Comarch


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TAGS: Banking, banking technology, Comarch
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