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Trust never sleeps: Deepening the customer relationship in an era of bank defection


In the business world and among financial institutions, some people like to say that “cash is king.” Among traditional retail banks, another currency is just as valuable, if not more so: trust.

While that might sound like a cliché, it’s anything but. Trust is a more precious commodity than ever in this age of digital banking, cybercrime and shrinking branch staff.  And billions of dollars in market share are literally hang in the balance as the retail banking industry struggles to navigate the explosion of mobile technology, Millennials coming of age (and financial power) and the changing nature of customers’ relationship with their banks.

Simply put, it isn’t enough for banks to attract new clients and make sure the old ones stay put. Those customer relationships—which may start with a low-fee checking account and automatic bill paying—must deepen over time. When it does, you become their go-to financial establishment and financial advisor.

Again: That only happens if customers trust you. And winning trust is not as random as, say, winning the lottery.

Still, it should be simple. If customers like you and your products—as well as the price—and value the services your business provides, you’ve won a loyal customer. An unhappy customer heads for the door. But a new breed of retail banking customer defies that logic. Customer satisfaction and loyalty scores have soared in recent years, even though data suggest many pose flight risks: willing to defect if a rival makes a better offer. And even those customers who stay put aren’t necessarily going to throw more business your way.

Almost no correlation exists between a customer’s intention to stay with their current financial institution and whether they would use that same bank’s other financial products and services, according to Informa Research Services SEA Score, which measures member and customer engagement.

Many customers stay with their banks out of paperwork reluctance—because switching is too difficult or inconvenient. Add to that the distance between banks and their customers is growing wider; in fact, it first began to form when ATMs first arrived in 1967, 50 years ago this past June. For roughly eight out of 10 customers, the relationship with their primary bank is merely transactional in nature, not advice-based.

Meanwhile, more customers visit local bank branches less often, as online and mobile banking grow in popularity—and speed. A customer who deposits a check with a smartphone via remote deposit capture may get done sooner than with a teller, even if she is the first person in line.

Finally, customers increasingly shop around among financial institutions for services and products. Gallup reports that only four in 10 Baby Boomers with mortgages have those loans with the same institutions that handle their primary banking; the figure is two in 10 when it comes to investment accounts.

All isn’t lost, though. Informa’s data shows that customers who feel valued and appreciated are more likely to keep and grow their relationship with that same bank. How banks choose to do that represents a constant challenge in an increasingly complex banking world.

But while banks can measure customer behavior in big data, or reduce marketing plans to a series of smart bullet points, the personal relationship factor has remained a constant throughout banking’s history.

What is old, then, is new. And while that might sound like a cliché, it’s anything but. Just ask your would-be loyal customer about feeling valued—in person, if possible.

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Sue Hines is head of customer engagement at Informa Research Services. Sue has more than 30 years’ experience in consulting and brand measurement. She brings deep understanding of consumer mindset and the ties that bind people to what they buy and the organizations with whom they do business.