Racing ahead: why customer-centric banks are winning the race for customer loyalty

In Australia and New Zealand, the financial services industry is more competitive than ever. Banks face immense pressure to modernise, deliver seamless digital experiences, and keep pace with skyrocketing customer expectations. Once-reliable legacy systems and outdated processes no longer cut the mustard. Digital disruptors like Afterpay, Xero and Humanitix have rewritten the playbook, proving that customers demand more—speed, convenience, and personalisation. Those who don’t adapt risk being left behind in the dust.

But it’s not just about outpacing other banks. Today’s competitors come in the form of nimble fintechs, powerful tech giants, and even your own customers’ evolving expectations. With nearly 99% of banking interactions in Australia now happening digitally, customer experience isn’t just a feature—it’s the make-or-break factor for banks aiming to lead the pack and secure top spot in the hearts and wallets of their customers.

The larger banks in Australia and New Zealand are currently prioritising investment in modernisation programs to systematically address their long ignored technical debt accumulated over many years due to their legacy systems and through their historical acquisitions. They are endeavouring to break the habit of layering newer technologies or introducing further point solutions on top of outdated infrastructure, which has in the past compounded their technical debt and increased system complexity. This approach may have provided short-term solutions but it limited their ability to innovate and deliver integrated, customer-centric engagement platforms.

On the other hand, many of the local small and mid-tier banks that rely on all-in-one, generic solutions from incumbent providers, face different but equally restrictive challenges. As they look to accelerate their growth, there is a growing realisation that these platforms often lack the flexibility and innovation needed to adapt to modern customer expectations, especially in digital engagement. These banks, constrained by systems prioritising core banking functionality while treating digital capabilities as secondary concerns, are realising that what was previously a small change to deliver seamless, personalised experiences to meet the demands of today’s digitally savvy customers, now require a larger version change.

Just like the Melbourne Cup, where a jockey's relationship with his or her horse is just as important as speed and endurance, the banks that win today are those who understand their customers deeply. Customer-centricity means knowing customer preferences, anticipating needs, and delivering frictionless experiences at every touchpoint. The real differentiator today is not just offering digital services, but creating meaningful, tailored customer journeys that keep people coming back.

What separates the winners from those lagging behind?

• ⚡️ Agility to adapt: Banks that quickly roll out new products or services, in response to changing market demands, are positioned to stay ahead
• 🙋‍♀️ Tailored value propositions: Personalisation isn't a buzzword; it's a necessity. Banks that deliver customised services and offerings based on customer segments create deeper connections and foster loyalty
• 📱 Omnichannel experiences: Modern customers expect seamless transitions across mobile apps, online banking, and in-branch services. The winning banks unify these channels to create a consistent, seamless experience that gives customers control and ensures convenience.

Not all banks are running this race on an equal footing. Legacy systems slow many banks down, preventing them from being agile and responsive. Outdated technology can be a costly burden, limiting their ability to innovate and improve customer experiences. According to industry studies, up to 80% of IT budgets in banks are consumed by maintaining these legacy systems, leaving little room for innovation (McKinsey).

To overcome these challenges, leading banks are turning to Engagement Banking Platforms—modern solutions designed to meet the needs of today’s fast-moving, customer-centric world. These platforms break down silos, integrate services across touchpoints, and allow banks to deliver real-time, personalised customer experiences. More importantly, they create a foundation for progressive modernisation, where banks can incrementally upgrade their systems without large-scale disruptions.
 

Here’s how Engagement Banking helps banks not only accelerate but also outlast the competition:

• Tailored value propositions: Deliver personalised services that adapt to each customer's needs, building deeper relationships and enhancing loyalty
• Journey-based modernisation: Modernise critical customer journeys, like onboarding, with end-to-end integration—boosting efficiency and improving the overall customer experience
• Incremental wins: Embrace a step-by-step modernisation strategy, allowing your bank to update technology in manageable phases without disrupting daily operations
• Unified architecture: Create a single, integrated platform that unifies all customer and employee interactions, breaking down silos to deliver a consistent experience and accelerate time to market
• Platform synergies: Innovate faster with a composable platform foundation, reducing operational costs and maximising customer lifetime value

Banks that embrace Engagement Banking are positioning themselves as leaders in the race for customer loyalty. They’re not just offering a digital solution; they’re delivering value at every customer interaction, personalising experiences, and outpacing competitors by focusing on what matters most: the customer.