Engagement banking – what’s the point?

It could be argued that engagement banking no longer makes sense. In a world where digital, open banking and smart fintechs have stolen the show, the customer could potentially be more fickle than ever. Open APIs have completely changed the landscape, as people shop around and change financial institutions at will. If changing banks is easier than it ever has been, is there any real value to making heavy investments in customer engagement? Can customers be engaged in the first place, or will they simply be swayed by the best deal available at any time?

Not just current customers

According to Gallup research, not only is there still value in engagement, it’s essential for any financial institution that wants to stay relevant. We know that customers who are engaged stay longer and buy more. What usually happens is that we onboard them and then go into engagement mode as part of retaining them. At least that’s how it used to be. The game has changed however and its important to drive these efforts further back along the sales funnel. Engagement banking actually begins long before a prospective client even joins the customer base. It starts from the moment they are considered a potential client.

There has been a substantial change in how and when engagement is carried out. Whereas it once involved learning more about current customers to boost retention, today it begins well in advance of onboarding. Strategy and communications are not solely based on what somebody has done before. Big data provides such deep insights into people’s needs that the bank can optimize any offers made to them. Instead of adopting a one-size-fits-all approach, demographic, financial and geographic parameters can be used to target the right offer, the right way, first time.

Onboarding never stops

Effective engagement not only ensures that customers will sign up, it increases the longevity of the relationship. Aided by the bank’s experience and effective targeting, customers can be helped to select products that work for them in the long term. Such assistance shows them that the bank already understands them, which bodes well for any future relationship and builds confidence. Targeted rewards and loyalty benefits of course strengthen the relationship, but making the customer feel that they are front of mind from the start goes much further to engaging them. After all, they can most likely get similar rewards from a competing bank, so the conversation becomes about who can really help them control their financial destiny.

Onboarding, once achieved, essentially never stops. Customers can always look beyond their current provider for new products, so banks must constantly engage them to secure a place on the list of alternatives for any new requirement. Once a customer feels that a bank is really tuned into their needs, they will be more inclined to consider them first before looking around. They are engaged, and their current bank becomes the first provider they consider.

Proactive, omni-channel engagement

To convince a customer they will act in their best interests for years to come, banks must replicate this proactive engagement across all channels. Each channel should reinforce their superior understanding of a customer’s needs. Digital channels are part of the toolkit, facilitating timely re-targeting, clever mobile-based communications, and more. All of this ensures relevant messaging, showing a customer their needs have not only been noted, but proactively acted upon. All strings of the omni-channel effort must support this endeavour, including the human aspects, such as face-to-face. The customer representative must be as tuned into their needs as other channels. This is how banks can ensure a breakdown in engagement does not occur.

However a bank communicates, every contact point is an opportunity to convince the customer that staying put is the best option for any decisions they make in their financial life.

An emotional connection

In any conversation, building strong connections needs a display of engagement and interest. If every part of the bank is listening, it displays that engagement to the customer, so the customer will engage too. It’s a two-way street, and the bank must lead by example as part of building and maintaining valuable relationships.

Engagement boosts relevancy, creating long-lasting ties that benefit both parties. It future-proofs the bank for an industry that has become unrecognizable in recent years. True engagement lets a bank intertwine with the very fabric of people’s financial lives. Their role in the future is therefore secured as they can continue to learn about the customer and further optimize offerings to their needs. The bank becomes more than merely a provider, it becomes a partner to customers as they go about one of the most important aspects of their lives. As with so many other things, great engagement banking is, at the end of the day,  simply a matter of good communication.