How to retain customer loyalty in Financial Services

Coins jump from one piggy bank to another

The Financial Services industry needs to start rewarding loyalty better in this ever-evolving digital landscape.

Bank accounts - perhaps not the sexiest of subjects, but we’ve all got them. In fact, according to recent research we’ve all got several. With the average person being the customer of 5 different financial services companies, it seems that most of us are in an open relationship with our current account provider.

An era of open banking has driven competition; shiny newcomers like Monzo and Starling have undergone rapid expansion and financial monogamists are now well and truly in the minority, with only 12% of customers maintaining a relationship with a single provider.

The convenience of everything in one place

Whilst the big retail banks still dominate in terms of share, market saturation is expanding. Challenger brands are taking advantage of lower barriers to market entry, and following the ‘Open Banking Mandate’, can receive customer banking data shared securely via APIs.

Regulations introduced in 2018 require financial service organisations to make consumer data available by request. This enables innovative digital-first challengers to offer aggregation services, pulling together financial data from multiple sources to be displayed neatly in one interface. Gone are the days of keeping detailed spreadsheets of your incomings and outgoings from various accounts, as early adopters now flock to providers like Curve or Yolt to see an instant view of all their accounts and lines of credit within one slick app.

Multiple products equal a stronger relationship

New entrants to the market mean increased competition - whilst consumers may not be tempted to sever ties completely with big retail banking providers, heads may be turned for secondary financial products. Whilst browsing an aggregated view of their finances, a consumer may be drawn in by the allure of an instant access savings account, travel money service, or even an insurance product. Fostering loyalty doesn’t just mean holding onto existing custom, but maximising relationship value by ensuring multiple product holdings with each customer. Easier said than done when 55% of adults now hold financial products with between 2 - 5 companies. It’s clearly a climate where there are ‘plenty more fish in the sea’ for consumers.

Consumers are waiting to be wooed

For insurance providers it can be even harder to hang onto customers, let alone foster loyalty. If it’s tough to spice-up consumer perceptions of banking, then inspiring passion for insurance can be a veritable Everest climb for marketeers. Unfortunately, insurance is often considered a ‘grudge’ purchase by consumers, a necessary inconvenience; a means to an end. Alongside this, there are limited chances for meaningful interaction within the average policy lifecycle, plus regular renewal windows which can act as speedy escape routes for dissatisfied policyholders.

Bad news for providers is bad news for consumers too, who largely feel unrewarded for their custom by insurers. There might be a shortage of loyal policy holders to reward, but there’s certainly no shortage of customers waiting to be won over - after all, ‘build it and they will come’ (and hopefully stay!).

“35% of consumers would be loyal to an insurance brand if it offered rewards”
(UK Home Insurance Industry Report - Mintel, 2019)


So, which companies are getting it right? Supermarket banks are at the forefront of the loyalty game, voted the best at rewarding loyalty by customers; they often offer instant rewards which are more likely to be appreciated and utilised. M&S bank are on top, with 56% of customers feeling rewarded for their loyalty and Tesco Bank isn’t far behind with 51%. Where these providers hold an advantage is in their ability to leverage existing customer touchpoints, integrating their financial service offering with their core business - offering instant gift cards or vouchers to incentivise and reward custom, tenure and product uptake.

This strategy needn’t be limited to supermarkets though. For insurance providers, similar solutions could take the form of smart-home technology rewards for home insurance; pre-paid fuel cards for motor insurance; even homeware vouchers for contents cover. Or, let customers decide the touchpoint for themselves with self-serve reward portals such as Select, pre-paid cards like Pure or multi-retailer e-gifts, e.g. One4all or our Choice Family.

"Solutions like these can help insurers play a greater role in consumers’ lives, thus deepening the customer relationship and ensuring greater loyalty. In time, insurance providers can position themselves as the trusted guardians of people’s homes, belongings, health and financial wellbeing."
(Loyalty in Financial Services Report - Mintel, 2019) 


How Hawk Incentives empowered a major bank to attract and retain insurance customers in 2019:

Customers were incentivised to take out home insurance policies and rewarded with an e-gift card via our Select platform after they’d reached a certain tenure.

Customers could select their choice of e-gift from a tailored catalogue of popular homeware and home improvement retailers.

The banks policy uptake and retention increased.

Right gesture, right time

Whether or not customers feel rewarded in a meaningful way is a vital component of a greater matrix. There are plenty of ingredients in the mix when it comes to pinning down the sought-after recipe for loyalty. Rewards are a great way to incentivise, recognise and reinforce desired behaviours, but it’s important to ensure that gestures arrive in the right way, at the right time. Rewards are most effective when they form meaningful connections and drive specific action.

Which behaviours should be rewarded then? According to Mintel, there four key measures: tenure, trust, recommendation and product holdings - each of which contribute towards generating a loyal customer base, and each of which can be re-enforced through timely and connective rewards.

For insurance providers, which typically see low customer tenures, length of time spent with the provider is the type of behaviour just crying out to be recognised. For major retail banks who tend to score highly in trust, but lower when it comes to multiple product holdings, it might be more pertinent to incentivise product up-take amongst existing customers, with rewards available for those who do.

The formula isn’t ground-breaking; it’s about identifying gaps and finding solutions. Whichever desired behaviour is lacking in your business: identify, incentivise, recognise and re-enforce accordingly.

Zanaba Poland sits within our Financial Services Account Management team running the day to day of the Barclays Premier Rewards loyalty platform. Rewarding behaviour is at the heart of our work with the programme, providing Barclays Premier customers with a reason to stay loyal to their bank.

During her 3 years with the business, Zanaba has also managed highly successful campaigns for some of our insurance clients; utilising our core Select and Redeem platforms that provide the ultimate choice of reward for our client’s customers.

If you’d like to discuss how Blackhawk Network can assist with your banking or insurance proposition, then contact us using the form on the right-hand side or give us a call on 0207 419 8100.