We live in a fast-paced era where financial services are growing tremendously and traditional banks struggle to meet increasing demands from customers. With stiff competition in the market, customers have more options than ever making it difficult for banking and finance firms to retain customers in the long run.
It is important to stand out from the crowd by taking the help of a reliable loyalty rewards marketplace and offering a wide range of incentives and rewards to elevate the banking loyalty experiences for customers.
Why the Banking Sector Must Focus on Rewards and Incentives?
Banking firms are going beyond transactions and conventional banking services to offer incentives and rewards that can help drive customer engagement and loyalty in the banking sector. Listed below are some of the main reasons why building a compelling reward and incentive proposition should be a primary objective for the industry–
1. Higher Customer Engagement
Incentives and rewards can be powerful tools for building long-term engagement, especially in a landscape where customers have the flexibility to switch accounts easily & spread their deposits across multiple institutions. This clearly shows that there has to be a compelling reason to make the customer stay loyal towards your bank.
A survey at Accenture shows that most banks claim to be customer-centric, but less than 15% of them reward customers for their holistic relationship with the bank. Make use of incentives and rewards to cultivate long-term customer relationships, drive loyalty and brand advocacy thereby increasing revenue from primary customers by up to 20%.
2. Influence Financial Behavior
Incentives play a crucial role in redefining consumer behaviour, as per the statement by behavioural economics. Making use of incentives and rewards programs can drive positive financial behavioural change to a huge extent – whether it’s incentivizing savings, offering guidance on responsible spending habits, or encouraging digital banking adoption.
Your brand can offer incentives aligned to specific economic activities, which can help build an emotional connection with customers, driving loyalty and engagement. Moreover, these programs can lead to revenue increase, higher product adoption, more utilization of digital assets, reduced contact centre ratios, and improved operational efficiency through self-service portals.
3. Boost Partnerships with Merchants
Banks and merchants must maintain a symbiotic relationship backed up by incentive and reward programs. Merchants get immense benefits from new customer acquisition, higher engagement and customer spending, which ultimately leads to more foot traffic into stores & online, higher transaction volumes, and enhanced brand visibility.
Similarly, with increased transaction volumes, banks get incremental revenue from associated fees and gain access to merchant data for a deeper understanding of customer purchasing behaviour and preferences. Customers, on the other hand, enjoy great discounts and offers, fostering a mutually rewarding scenario for all involved.
4. Tailored Customer Experiences
Customers expect personalized experiences more than anything from their banks and they want engaging and relevant experiences with recommendations similar to what eCommerce brands like Amazon or Netflix provide to customers regarding customer service & recommendations.
Lack of personalization can be the biggest turnoff for customers, impacting NPS and reducing engagement. By providing access to a wide range of content and multiple reward mechanisms, banks can offer truly personalized experiences that resonate well with individual customers and drive behavioural outcomes.
5. Use Data-driven Insights
Incentive and loyalty reward programs can be a great way to collect valuable data for banks, providing insights into consumer spending patterns, behaviours, preferences, and emotions.
By making use of these data insights, banks can build a deeper understanding of their customers and segment them based on various metrics, including their value. Knowing customer data can drive more targeted strategies and ultimately boost the overall customer experience while increasing the bank’s bottom line.
Final Statement
After going through the points stated above, it is clear that banking customers prefer personalized benefits and rewards designed exclusively for their specific needs. Chase Bank is an American multinational finance company that offers a wide range of rewards enabling customers to redeem them on travel, experiences, merchandise, gift cards and even cashback.
Though your bank may not have a large customer base like Chase, it is becoming essential to keep more focus on customer-centricity, innovation, collaboration and delivering real value to customers. If you wish to reshape the future of your banking services, connect with the experts of the leading Loyalty solution provider and build a customized loyalty program that offers rewards and incentives aligned with specific customer needs.
