Deluxe Financial Services, a subsidiary of the Deluxe Corporation, offers technology-based solutions, primarily to banks and credit unions of all sizes, to drive revenue growth and generate a robust ROI. These solutions include data-driven marketing solutions, treasury management solutions, loyalty and engagement solutions, and more. The brand works with over 5,000 financial institutions, including nine of the ten largest financial institutions in the world.
Deluxe Financial Services strives to be an indispensable partner to its customers by providing tailored loyalty solutions to meet the unique requirements of the financial services industry. Its solutions leverage its patented platform, full-service agency, and breadth of product offerings to enhance its customer relationships. Recently, Loyalty360 sat down with Adam Craig, Vice President of Deluxe Financial Services, to discuss the brand’s research into customer engagement.
“Banks and credit unions are struggling to truly engage customers for several reasons,” Craig said. “First, while consumer surveys show a high degree of trust for financial institutions, they also reveal that banks are failing to meet their expectations of service. Financial institutions are often seen as slower than non-bank FinTechs in terms of response time on loan applications, account opening processes, and customer support. Despite financial institutions claiming to differentiate on service, most consumers are not satisfied with the level of service they receive, which has a direct impact on their willingness to engage.”
He continued, “Consumer expectations of user experience in virtually all demographic segments have been influenced by their non-bank relationships with companies such as Uber, Amazon, and Netflix. Most bank user experiences, whether mobile or not, lag what consumers find in other verticals, resulting in lower active engagement. In the case of banks and credit unions, this often results in interactions only when a consumer has a transaction, versus seeing the bank as a partner they seek to engage with more.”
Craig suggested that banks need to tackle this issue. “Financial institutions have an opportunity to improve in this area by spending more time and effort focused on understanding consumer expectations and how their consumer experience maps to those. We see that consumer engagement is lower than it should be because banks and credit unions have not gotten to the point where offers and engagement mechanisms are aligned with consumer demands. Whether its lack of personalized experiences and communications, lack of personal and curated benefits, or timely and relevant offers, many FIs have failed to create scenarios where consumers want to engage. With all the competing demands for consumer attention these days, it’s critical to create those moments where consumers truly want to be engaged.”
Regarding the slow rate at which financial service customers earn and redeem points, Craig said, “One of the reasons that the percent of customers not earning or using points seems high relates to the fact that most financial institutions don’t adequately reward checking and savings customers. We believe there is an opportunity for banks to improve against customer expectations by offering an engagement program for these account types. Doing so will improve customer engagement and dormancy while differentiating themselves from their competition.”
He added, “In terms of credit cards, it often takes too long for a customer to redeem enough points to trigger a redemption. Additionally, most consumers carry more than one credit card, and banks, therefore, are left competing for wallet share in a very crowded market with many choices. In the consumer’s eyes, only the best card wins, and they are likely carrying cards where there is little to no earn activity taking place, so point balances don’t accumulate. We believe that by designing engagement programs that encourage and enable redemption early and often during the consumer lifecycle, financial institutions can overcome silent and costly attrition.”
When asked which research results he and his team found most surprising, he said, “One of the most surprising findings from the research was the tenure associated with dormant accounts. We are used to seeing as many as 35 percent of bank customers go dormant within the first 90 days, often due to ineffective onboarding or failure to meaningfully engage with new customers. The research revealed a large and valuable segment of customers with long tenure who were disengaged. This represents potential costly attrition for banks and is something that can be overcome with effective engagement tactics.”
Craig also expanded on weak relationships driving disengagement within the industry. “Consumers have more choices than ever before and no longer need to stay with a brand when they do not feel valued, have a poor customer experience, or feel detached from a brand. Empowered consumers understand the power they have in the marketplace and exercise that power to switch. Even if they don’t abandon a relationship completely, they make definitive choices about their preferred provider, credit card, or brand, often resulting in silent attrition. It is therefore critical for banks to spend more time thinking beyond creating positive experiences and to focus on driving more meaningful engagement within their customer base.”
Lastly, he offered some advice for financial institutions. “We often see engagement strategies that are undifferentiated by customer demographics, tenure, or customer intent. Engagement strategies that lack personalization and treat every customer the same are generally destined to achieve mediocre results. It is critical to think about leveraging data to customize customer interactions, keeping customer touches relative and personalized, and to apply a variety of engagement tactics based on a deep understanding of the customer’s journey and objectives. When financial institutions can connect more deeply with their customers, align experiences with expectations, and offer something different from the competition, they will be in a position to transition from commoditized transactional relationships to trusted and valued partners.”
To view the full results of this proprietary research from Forrester, click here.