LOYALTY BANKING
“ Combining loyalty rewards with a frictionless customer experience can be a way for brands to set themselves apart and drive lasting loyalty ”
KATRINA CUTHELL SENIOR PARTNER , BAIN & COMPANY
Closing the loyalty gap As part of its ongoing research on customer loyalty in retail banking , Cuthell reports that Bain has noted three key trends in the last 10 years :
1 . Traditional banks have noticeably struggled to make up the shortfall in their customer loyalty performance compared to digital banks . “ In the US , the average Net Promoter Score [ ranging from -100 to + 100 ] in 2019 for national banks was 23 and 36 for regional banks . By comparison , direct and digital banks scored an average of 69 .”
2 . Digital adoption among traditional banks is at record levels as they seek to emulate the fast , fluid , and convenient digital offerings of tech competitors . “ While virtually all banks have moved the majority of routine transactions to digital , only a few have successfully converted complex interactions involving sales or advice . However , in 2020 , we saw a significant improvement in the performance of digital channels .”
3 . Digital channels are fast becoming customers ’ de facto preference . As such , Cuthell notes a rise in “ hidden defection ”, whereby customers buy products from banks and providers not affiliated with their primary bank . “ Our 2020 research found that between 25 % and 51 % of all banking product purchases [ follow this trend ]. Hidden defection may also increase in many countries as Open Banking regulations make consumer data portable and therefore encourage competition .”