“Too many banks still look at their customers as account holders rather than people who have emotional expectations in their relationship with different brands.” -Marc Whitehead
Imagine that you need help from your bank today. The first thing they’ll say to you is something like, “Let me pull up your account.”
What an impersonal way to start a highly personalized interaction. Banking customers notice this disconnect and it chips away at the belief that their bank cares about them. But are banks noticing? Do they care?
At Emotive, Marc Whitehead and Nick Bond use the Apex Scoring System to measure customer loyalty and observe common patterns. They recently shared their latest findings from the 2022 U.S. Banking Industry Loyalty Report with James Robert Lay on the Banking on Digital Growth Podcast.
Good News and Bad News About Banking Relationships
Marc and Nick want you to know that their 2022 U.S. Banking Industry Loyalty Report isn’t all doom and gloom. Sure, it includes some news that might be difficult for banking executives to accept, but it also offers tremendous opportunities for learning and growth.
First, you should know that the report was commissioned in part because their last major study happened during the COVID-19 pandemic. The latest report presents intriguing before-and-after data.
So as the world begins to emerge from the pandemic, how has banking changed?
Related Content: How Will Banking Adjust to Life After COVID-19
In a broad sense, the latest results of the study show that banking account holders have evolved in their needs. Before the pandemic, it was still good enough for a bank to say, “We offer good products and services and competitive rates. We have good customer service. That’s enough.”
Today, it’s no longer enough. Your customers endured an emotional and traumatic shared global event that impacted their worldview. They’ve been forced to rethink their finances, futures, and ability to do things like save money or take a vacation.
During a time when the world felt scarier, the average person’s financial picture also became more complicated than ever. They’re dealing with inflation, job loss, gas prices, medical bills, sick family members, and bank accounts moving closer to zero.
“It is messy,“ Nick says, “And at the end of the day, they need an institution and they need products and services and people, really, more so than anything, that they can count on.”
Bottom line: your customers need support.
“And it’s in these areas that we found, I think, the biggest failings,” Nick says. New, upstart banking brands are providing more support and genuine human connections than traditional banking brands.
Related Content: Your Customers Are Human, So Serve Their Emotional Needs
Of course, many financial brands go on and on about their desire to build emotional connections with their customers. Creating an emotional connection isn’t a new idea. But Nick says most banks are still failing to do it. There’s no meaningful connection for tired, scared, and overwhelmed customers.
Banking comes with an inherently high cognitive load. It’s mentally challenging to deal with your finances. Customers want to feel calm and confident, but interacting with your brand might make them feel the opposite.
Upstart financial brands, neobanks, and fintechs are capitalizing on this situation, luring away your loyal customers. Traditional banking brands are now in danger of losing millions of current and future customers forever.
The Mindset of a Modern Banking Customer
To address the problems of modern banking, you first have to understand the mindset of modern banking customers evaluating your brand and comparing it to others. Based on the loyalty report, here are some things you should know about the consumer mindset.
- They want you to be forward-thinking and anticipate their needs.
- If you invest in innovation, they want your services to remain affordable.
- They don’t want to be guinea pigs for your new technology.
- Dependability and respect are their primary underserved emotions.
The two emotions mentioned above, dependability and respect, are addressed in the survey by measuring customers’ reactions to statements like, "Does my bank have my back?" and "Does my bank treat me like a human being?"
Unfortunately, many legacy banking brands get very low scores on these questions.
Nick explains that banks should be careful about what they take away from this information. It would be easy to conclude, “We should just do what neobanks do!”
But that mentality is misguided. Because all you’re doing is chasing after your competitors and trying to steal their ideas.
Instead, chase your customers.
Put your efforts into understanding the customers who have already self-selected to do business with you and use that knowledge. Focus on the joyfulness of providing an excellent customer experience. Learn what resonates on an emotional level with the people who are attracted to your brand.
Sometimes, it’s about changing your tone rather than just modifying your message. Maybe your call center needs to pick up the phone more quickly, answer with a more friendly voice, and make people feel that your customer service is more human.
Lessons to Learn From Challenger Banks
Banking executives from legacy brands are often surprised to discover that upstart digital-only brands are building strong emotional bonds with their customers.
A brand that’s 100% online and has zero branch locations feels more personal.
How is this possible?
The new challenger brands are better problem-solvers. They’re building technology that serves the customer, above all else.
Nick encourages legacy brands to think about the “storybook version” of their banks and compare it to the real world. In the storybook version, everyone knows your community bank and it’s a wonderful place to visit. But in the real world, your bank got bigger and began to view its customers in terms of share-of-wallet metrics.
Your customers aren’t people anymore. They’ve noticed.
Challenger brands, instead, focus on the real world and don’t care about your storybook history. They keep a laser focus on the day-to-day needs of today’s customers. Instead of allowing the banking experience to feel opaque and intimidating, they welcome people into it.
“They're decluttering,” Nick says. “They're uncomplicating this thing that the industry has gone on to create all this complexity around. And I think, I don't want to be crass, but some of that might have been on purpose.”
Traditional banks thrived on creating complexity that encouraged people to rely on them for financial management. In the past, confused customers were grateful for a bank’s help. Today, confused customers - who have an array of new banking options - become frustrated and say, “Enough is enough.”
How to Bridge the Emotional Gap
Many legacy banking brands are finally learning about the emotional gap between themselves and their customers. They’re listening to podcasts, learning from blog posts, and wondering what to do next.
Nick suggests, “Start thinking about some of the emotional specifics.” Reconsider how your customer service center speaks and whether their language is too stuffy or scripted. Look more closely at your app’s user interface. Consider whether your tech is user-friendly enough to deliver a positive emotional experience.
Make banking a joy, not a headache. If someone is having a bad day, improve it.
Nick also explains that their research shows people want to keep the banking experience uncomplicated. They’re tired of feeling like banks make difficult things more difficult. Instead, they want simple and honest interactions that clear things up.
Marc shares a reminder that this shift in perspective has to occur as early as possible, including from the first point of contact with customer onboarding. Start gathering information about the customer’s feelings and beliefs. If your customer management system (CMS) doesn’t currently allow you to gather and store this information, add this capability immediately.
When someone’s loan or mortgage comes up for renewal, does your customer service rep have information about what drives them on an emotional level? What’s happening in their life? What motivates them? What interests them?
This information changes over time. When you first encountered a customer 10 years ago, they were about to get married. Now, 10 years later, they’ve been married a long time and they’re trying to save money to send a child to college. This is your customer’s real and evolving financial life.
Keep the focus on these real-world, human concerns. Welcome emotions. Spark conversations. Bring the joy back to banking. These are the secrets to bridging the emotional gap and building stronger long-term bonds with your customers.
To learn more about the banking loyalty study discussed above, visit apexscore.ai. You can also email firstname.lastname@example.org or email@example.com to discuss their banking research. Reach out to James Robert Lay and access more resources about digital transformation at digitalgrowth.com.
This article was originally published on December 15, 2022. All content © 2023 by Digital Growth Institute and may not be reproduced by any means without permission.