Retail banks and credit unions are facing a loyalty crisis. According to Gartner, 20 percent of retail banking customers moved money from or switched primary providers in 2024. JD Power reports that 13 percent of U.S. retail bank customers are likely to switch institutions within a year, with an estimated average customer attrition rate at about 15 percent. Assigning a modest $2,500 customer lifetime value, losing 1,000 customers translates to $2.5 million in lost revenue. Improving bank customer loyalty isn’t just a desirable outcome; it’s critical for the business.
There are a number of reasons a customer may choose to leave, but it’s clear that there’s a growing disconnect between what customers expect and what banks deliver. One common reason cited for switching is a poor customer experience (CX). In a Financial Brand survey, 73 percent of customers expect their bank to understand their unique needs and expectations – up from 66 percent in 2020.
Across industries, customers are expecting the same relevant, personalized interactions they’re familiar with from ecommerce. Accomplishing this requires a lot of knowledge about your customers, which all boils down to data. But banks are very often a step behind, struggling to personalize experiences, anticipate needs – and retain customers – not because they lack customer data, but because the data they do have is often fragmented, outdated, or lacking context.
Transactional and Basic Account Data Aren’t Enough
Banks and credit unions are both data rich and often data limited. Basic customer account and transactional data paint only a partial picture of a customer, providing little in the way of the context necessary to understand a customer in order to provide a personalized, engaging experience. Transactional data shows what customers do, but not why they do it. Understanding the why requires contextual data that offers insight into their financial goals, life situation, risk tolerance, their household makeup, retirement plans, etc.
Trying to deliver a personalized experience using only transactional data risks generic messages, irrelevant product recommendations and missed opportunities to engage customers, and none of those things will turn them into loyal customers.
The key is to turn the raw data that every bank possesses into actionable data. While difficult, the good news is that these data issues are fixable.
Data Readiness: A Strategic Enabler for Loyalty
The way forward is with data readiness. Data readiness is the ability to deliver clean, contextual, continuously updated customer data across teams and systems; data that’s ready for use cases that include onboarding, cross-selling products and services, and even improving the customer support experience. It’s not just a technical capability, it’s a strategic enabler for loyalty.
Data readiness makes data right and fit-for-purpose for any CX or AI use case. It addresses loyalty and retention in a number of ways, such as:
- Building unified customer profiles that reflect a customer – or household’s – real-time behaviors, preferences, and life stages. Is a customer about to send kids to college, buy a new home, or about ready to retire? A persistently updated profile that collects customer data in real time from multiple sources, with a full list of attributes and data aggregates, provides the needed context that aligns marketing and CX teams with a real time, dynamic customer journey. Recommending relevant services and products becomes strategic rather than guesswork.
- Providing banks with the ability to launch personalized, cross-channel campaigns with confidence. Start by improving the onboarding experience across in-person, digital and even print touchpoints to increase product and service utilization for new account holders. Then stay with them via marketing campaigns that adapt with the customer journey. Dynamic, no-code segmentation and real-time decisioning give banks the ability to build an audience segment once, process interactions rapidly, and activate everywhere – always staying in perfect cadence with the customer.
- Helping guide customers to relevant resources based on updated behaviors, preferences, and life stages. A rich, contextual profile is the key for moving away from transaction-based marketing and instead delivering next-best actions in which decisions are based on a complete understanding of a customer. Kids almost off to college? Here’s information on how to optimize a 529 plan investment strategy, plus some first-time budgeting resources and student account options.
- Providing banks with predictive and prescriptive analytic tools to make decisions aligned with the propensity of customers to take certain actions. By identifying disengaged customers early, or those with a high likelihood to churn, banks can deploy proactive retention strategies – increasing customer satisfaction and bringing them back into the fold.
The Cost of Incomplete Customer Data
Personalization is no longer “optional” for today’s customer, and inserting their first names into an email doesn’t count. A PYMTS loyalty study declared programs a “strategic necessity,” revealing that 60 percent of customers say they want rewards customized to their relationship with their bank – yet less than half (45 percent) are satisfied with their current options. If that’s not convincing enough, the Financial Brand study reported that a staggering 62 percent of bank customers said they would switch providers if their current bank made them feel like a number rather than a person.
It’s not just that there’s a deepening expectation for customized rewards and other personalized experiences. It’s that customers have made their intentions clear – they will go elsewhere if those expectations are not met. Customers that don’t feel understood or valued are at a much higher risk of churn – which is bad for the bottom line.
It’s not just churn, though. Unengaged customers lead to underutilized services and products, missed sales, lower customer satisfaction scores, and a competitive disadvantage overall. Lacking the contextual customer view can not only lead to these problems, but can also make it more challenging for teams to provide effective remediation.
Change Your Approach with Customer Data Readiness
Data readiness unlocks loyalty by providing banks with customer data that is always accurate, contextual, and fit for purpose. With a real-time understanding of a customer or household, banks move from older, more traditional marketing campaigns to proactive, customer-centric engagement that aligns with each customer’s journey – at scale.
Continual data cleansing and contextual enrichment ensure every interaction is relevant. When unified profiles are made accessible across the enterprise – unbound by channel or business unit and integrated into relevant systems – marketing and CX teams can deliver perfectly timed interactions: the right message, in the right channel, at the right moment. Customers are guided along an appropriate path, satisfaction improves, revenue increases.
In banking, loyalty is no longer won with products or rates alone. It’s won by showing customers that you see and understand them as individuals, not account numbers. Data readiness is what makes that possible – giving marketing, CX, and even support teams the confidence to deliver consistently relevant experiences that deepen trust and build lasting relationships.
To see how the Redpoint Data Readiness Hub can help you unlock the full potential of your customer data and deliver consistently relevant personalized experiences – using your own data – click here.
