NET LOSS: Why Banks are Losing Customers

R

emember that time you called or went to your bank and had such an incredible experience that you told everyone you knew that they need to switch to your bank as quickly as possible? 

…what? You don’t remember that? 

Of course you don’t… it never happened. 

Don’t worry, it’s not just you. It’s everyone. And it’s a big problem. 

We know this because, in collaboration with Schlesinger Group, we recently published our 2022 US Banking Industry Loyalty Report. In speaking with over three-thousand customers of some of the biggest legacy and fastest growing challenger banks in America, we knew we’d find some hits and misses in the sector, but wow… the misses are everywhere! 

We’re all wading through a particularly troubling time, especially if keeping some kind of plan for a healthy financial future is a priority for you. Soaring inflation, rising interest rates, dizzying market fluctuations, and crumbling consumer confidence, all spurred on by the endlessly long tail of Covid and the horrific war in Europe are all conspiring to make life exceedingly complicated, frustrating, and expensive. 

It’s against this wake-me-when-it’s-over backdrop that we talked to banking customers using our Apex loyalty tracking platform to understand what’s working, what’s not, and where the industry can’t afford to leave customers hanging any longer. 

In looking at 10 of America’s very largest and most established banks (including the likes of Capital One, Bank of America, Citibank, Chase, and Wells Fargo), we see extremely varied loyalty scores, with a 37% spread from the best to worst. 

When we assessed the same loyalty scores among 10 of America’s fastest-growing challenger banks (such as Chime, N26, Axos, and Varo), we saw a stark difference, with scores that were, on average, 21% higher than the large legacy banks. One brand in particular, SoFi, appears to be running away with delivering the best banking experience around. 

In this hyper-competitive, increasingly fragmented, and highly emotionally-charged category, delivering anything looking like a middling experience could spell disaster. Our full report offers a wealth of findings, but three really stick out as the best place to start.

1. Say what you’ll do, and do what you say

Predictability, the Apex attitude relating to delivering a positive and consistent experience, shone through as the single most important indicator driving loyalty among customers in this sector. And happily, it is the one bright spot in the survey, with two-thirds of respondents agreeing their bank provides a predictable experience. That said, it’s an area with no upper limit for customers and continued focus on it will only serve to strengthen loyalty. 

“To be viewed as Predictable, your customers should feel at ease knowing what to expect when interacting with your brand. This predictability offers protection against intolerance of uncertainty, a common characteristic that drives people to avoid the unknown.”

2. Understand and overdeliver on emotional expectations

We saw before the pandemic, and continue to see now, that delivering Joy, experiences that make customers smile, is extremely important and generally under-delivered by all across the banking category. Other emotionally-charged areas where we see particular strength in challenger banks versus their legacy competitors, include Honesty (being seen as open and transparent), and Respectful (treating customers like human beings). In fact, it’s challenger banks’ ability to more effectively deliver relatable emotional reasons to engage that gives them a strong edge over their more rationally-focused big-name counterparts. For the record, local independent banks also fare quite well on these indicators. 

“To be felt as Honest and Respectful, your organization’s leaders must be willing to have tough conversations, be vulnerable and ensure that people always feel in the loop, even if the future is uncertain.”

3. The small things can deliver the biggest impact

There is a strong desire for banks to be more Forward-thinking, or innovative, in their approach. And this doesn’t only relate to the products or services they offer, but how they are delivered, and the thoughtful customer-led experience they’re wrapped in. Perhaps unsurprisingly, this critical element is being delivered 29% more effectively by challenger banks than by legacy banks, even though the products and services are, at their core, quite similar. What’s different is the platform, the tone, and the user experience they deliver that begins to truly set them apart. 

“To be believed as Forward-Thinking, you need to think of brand innovation and marketplace introductions that can directly impact the customer’s perceptions of how much your product or service is worth. If delivered well, these innovations can cause customers to experience a release of dopamine, making it feel like there’s the possibility of more rewards just around the corner.”

What’s the summary? While continuing to deliver on intuitive and predictable experiences, the banks that are winning are finding ways to emotionally connect and deliver much-desired innovation through thoughtful touchpoint delivery. The rest are simply getting left behind. 

Download the full industry report to get the complete picture and review Apex’s entire suite of behavioral-science driven recommendations and next steps to understand customer pain-points, remove roadblocks, and improve loyalty.

Feel free to share it around and perhaps that incredible banking experience you’re seeking will become a little less elusive.

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