Financial services organizations are standing on the doorstep of a new era. Firstly, digital disruptors such as FinTech have demonstrated the power of online presence. This made the industry realize that digitalization is no longer an advantage, but a must-have.
Secondly, customers are becoming more conscious of service quality. They might stick to a familiar provider for the time being, but if their demand for a more personalized, relevant treatment goes unanswered, customers might switch to competitors with a better customer retention strategy.
All of these issues have been further intensified by the COVID-19 pandemic. Customers of today are more ‘digital’ than ever and they are looking for the best deals of banks and insurance companies while online. And if you aren’t on the top of the list, even long-standing customers will leave you behind.
One way to strengthen the bond with your audience is by introducing a loyalty program that is geared towards the challenges faced by banks and financial services companies. A next-gen customer retention tool can foster long-lasting trust, shield customers from the competition, and even boost your digitalization efforts.
Table of contents:
Importance of Loyalty
Best Loyalty Program Features for Financial Services
What Is a Financial Services Loyalty Program?
Financial services loyalty programs are customer retention tools aiming to increase brand love and purchase frequency for banks and insurance companies. They are defined by an array of unique features that sets them apart from other, more traditional reward systems:
- Because customers don’t purchase products in a traditional sense, financial and bank loyalty programs instead incentivize members to spend money using their credit card or highlight service packages, such as loans or mortgages.
- Because of their unique nature, enrollment to financial loyalty programs is limited. In order to become a member, people need to have an active account, otherwise they won’t be able to progress.
- Companies in this industry have fewer opportunities to interact with their loyal audience. Customers generally only turn to them when it’s time to renew a contract. That’s why creating new touchpoints is a priority in loyalty programs.
- Lastly, financial and bank rewards programs are often used to promote content, educate members about current offers, and extend the brand’s online presence.
A bank that shows customers they are valued individuals will have more success in building long-term relationships. Customers are encouraged to maintain and consolidate business with firms they feel ‘know them’, so personalized experiences are key to showing them you understand their individual needs. Loyalty programs are an effective way to prove this, allowing banks to build up stored value and give it back to the client as a tangible, relevant benefit.
EVP and Co-Head of Global Business at EPAM
The Biggest Customer Retention Challenges for Financial Services
The reason customer retention is a pain point for many banks and financial services is that their attention is divided between multiple pressing challenges:
- Digital presence is more important than ever
In order to speed up the process of digital transformation, companies require a tool that incentivizes online interactions.
- Highly competitive environment
Without a solid customer retention tool, it is easy for customers to switch to a competitor that is offering more attractive deals.
- Lack of relevance
Customers aren’t interested in loyalty programs that don’t add value to their lives consistently, even after key transactions are made.
If your industry, or an adjacent industry, is going through disruptive changes, you will have no choice but to set a transformation course yourselves. If an enterprise is not prepared to have the same ambition level as what the market is craving, enterprises will have to pay a huge price for missing the window of opportunity to transform. In that context, executive leaders need to up their game for a transformation journey, to either expand the value proposition or create a new one completely.
Gartner, “Digital Transformation Starts With Redefining Your Value Proposition”,
Rui Zhang, Kristin Moyer, Hung LeHong, 19 February 2020 (Gartner subscription required)
However, a loyalty program could help solve all three issues at once. What’s important to note is that customers don’t value loyalty programs that fail to pay attention to their attitudes, behaviors and expectations. The solution isn’t to challenge the concept of loyalty, but to reinvent it.
Loyalty in the banking and financial services sector should be about emotional engagement, using a next-gen loyalty program. By creating new touchpoints that engage customers outside of the buying cycle—meaning they can earn benefits without paying—companies can show that they care about their customers and want to learn more about them.
“Banks are having a tough time with differentiation these days. Challenger Banks, FinTech and BigTech have stolen the show on digital, and only with massive investments and spin-offs has the traditional digital bank concept taken hold. A customer focused loyalty play is one of the best areas to increase the value of the bank to the customer and take the relationship to the next level, strengthening the digital image of the bank.
Founder and CEO at R34DY
Best Loyalty Program Features for Financial Services
With the most important goals defined, it’s time to explore all the features that modern loyalty programs offer to help banks and insurance companies stand out and garner customer trust.
1. Loyalty Logic for Financial Services
- Account-based membership & rewarding renewals
Only allow active, registered customers to benefit from your readily available perks and rewards. Financial services loyalty programs can restrict access to current account owners only. Furthermore, you can encourage account renewals or upgrades with specific loyalty rewards that are otherwise unavailable to other members, thus using FOMO and exclusivity to your advantage.
- Customizable loyalty program types
Set up a loyalty strategy that best suits your brand’s offerings. If you wish to encourage credit card usage, consider offering points based on net purchases made with the card. If you’re more service oriented, you can introduce tiers based on members’ account balances. And if your aim is to increase enrollment rates and build advocacy, a perk system with instant benefits is the best choice.
Customers expect unhindered customer service on all channels. Whether they wish to bank online from the comfort of their couch, make an investment while on the go, or visit a physical office, they want a quick, smooth and, above all else, a flawless experience. Top it all off with an omnichannel loyalty program that ensures customers can earn points or redeem rewards by doing all of these activities.
- Insurance: Reward healthy lifestyle
Engage customers outside of the buying cycle: reward customers through app integrations for pursuing a healthy lifestyle. For instance, using a Fitbit integration allows you to track a member’s workout progress. Incorporating this to your insurance program gives people an incentive to stay healthy. As a reward for reaching certain workout milestones, you can offer better insurance deals or give unique gifts from a partner.
The challenge is to run the core services customers expect regardless of the current pandemic. They should ensure companies provide stability and retain trust during these incredibly uncertain and stressful times, so people don’t get stressed over by not being able to access their money or start worrying because their payment is delayed. Loyalty can deepen the relationship, make it personal and reassure people their banking is one thing they don’t have to worry about right now!
Chief of Client Partnerships and Strategy at AND Digital
2. An Experiential Reward System
- A rich reward catalog with incentives from partners
Offer a variety of incentives to cast the widest net possible for your audience. Give cashback and direct cash rewards for discount-oriented customers. Reduce loans or mortgages for high-tier members, rewarding them for being a long-standing customer. Provide interest rate boosters that can be redeemed for points. Also, consider offering physical gifts or travel benefits from partners.
- Offer management
One way to keep the loyalty experience fresh and exciting is to introduce new offers and deals from time to time, giving people a reason to log back in, just to see if there’s anything new. With an enterprise-grade offer management tool such as Antavo’s, marketers can effortlessly set up hot deals, including bonus points for using selected cards, or double points campaigns for purchases made on Black Friday.
- Reward sharing
Build a community around your brand by allowing customers to form groups, interact with each other, and work towards a shared goal. For instance, set up a cashback reward with a high redemption margin and encourage members to pour their points into a shared pool. Once they hit their milestone, all participants earn a reward. The same can be done with charity events, where members can gift a reward to those who cannot afford it.
- The Mobile Wallet as a digital loyalty card
A Mobile Wallet is where people store their loyalty cards, reward coupons and event passes, which can be used for easy enrollment and reward redemption. In this next step toward digitalization, mobile passes are stored on people’s phones, which they always bring themselves, unlike physical cards. Also, the Mobile Wallet enables you to automatically send push notifications while customers are waiting at a branch or office, feeding them useful content or promotion.
Learn more about the capabilities of Mobile Wallet from Antavo’s video.
3. Features to Engage Customers Outside of the Buying Cycle
- Free membership bonuses
It’s also an option to make certain rewards available for every member based on their points or status, such as priority credit services, a fast lane at banks, zero-fee banking services, welcome gifts for new members, bonus points for newsletter signups, etc. Doing so builds customer goodwill, not to mention customers are less likely to leave for a competitor, as it would mean giving up these benefits.
- Exclusive clubs
If you don’t want to make rewards, such as priority credit service or fast lanes, available for all members, set up a VIP club within the program. Only customers who pay a significant entry fee in points will become insiders, guaranteeing that only a small group of highly dedicated members will be entitled to the high-end rewards.
Create buzz around your brand with Instagram contests and sweepstakes, spreading positive word-of-mouth about your brand. This is a cost-effective reward campaign, considering participation is free, but only one of the contestants is eligible for the reward. In sweepstakes and lotteries, each attempt can cost a small sum of points, and you can limit the number of attempts per day.
The biggest risks are genuinely cost-cuts usually associated with a crisis. Financial Institutions are having to rebuild trust with their customers, product offerings, and demonstrate a clear guideline on steps to recovery. The essential key is inconsistent communication – providing the reassurance needed to maintain a steady but reliable relationship with consumers. Realigning your loyalty offer strategy to meet new consumer spend patterns, will not only unlock experiences that cater to adaptation but enhances the journey in which drives emotional and psychological behavior. A brand’s responsiveness to customer behavior benefits the lifecycle and continued success.
Loyalty Product Manager at Discover Financial Services
- Content consumption
Encourage loyalty members to watch a webinar or participate in online workshops. Members can be rewarded with points or special one-time benefits for consuming the content. Consider using a questionnaire or quiz to check whether customers were paying attention before submitting the reward.
8 Rewards Programs Examples from Banks
Here are some of the best financial services loyalty programs to inspire you:
1. Citibank – Citi ThankYou
Citibank is an American multinational investment bank and financial services corporation headquartered in New York. The company’s loyalty program really shows the capabilities of loyalty programs in this sector:
- Enrollment requires a Citi credit card, and 1 point is earned with each $1 spent using the card
- 10% points back on all redemption options for the first 100,000 points
- Customers can buy 1,000 points for $25
- Earned points can be transferred to another member’s account
- Points can be used for travel rewards, gift cards, cash rewards, mortgage or student loan payments, and even charity donation
2. Bank of America – Preferred Rewards
The Bank of America is an American multinational investment bank and financial services company headquartered in Charlotte, with central hubs all across the world. The company has a tiered bank loyalty program, which offers increased benefits at each rank.
- The Gold level offers a 5% interest rate booster, 25% bonus on eligible, priority credit service, mortgage reduction, and no fees at select banking services
- The Platinum level requires a balance of at least $50,000, increases the values of all the existing benefits, provides 12 free ATM transactions per year, and allows members to make free online stock and ETF trades
- Users with an account balance of $100,000 or more are eligible for the Platinum Honors rank, with even better deals and unlimited free ATM transactions.
3. Wells Fargo – Go Far Rewards
Wells Fargo is an American multinational financial services company headquartered in San Francisco. It is the world’s fourth-largest bank by market capitalization and the fourth largest bank in the US by total assets. The company boasts a complex reward-based credit card system:
- Users earn rewards with net purchases and by using the credit card
- Each credit card has a different rewards system and benefits
- There are four reward categories: merchandise, gift cards, travel and online auctions
- Users can share their rewards with one another or donate their points to the Red Cross
4. Credit Suisse – The Bonviva Rewards Shop
Global wealth manager, investment bank and financial services company Credit Suisse was founded in Switzerland. What makes its loyalty program different is that point collection depends on the service package that customers have.
- Users earn points for every purchase they make using their credit card
- The number of points they receive grows when they have a more expensive package
- Having a higher status allows members to purchase products from a wider selection of goods in the reward shop
5. Barclays – Blue Rewards
British multinational investment bank and financial services company Barclays created a loyalty program that focuses on cashback offers, but in exchange requires a subscription fee:
- Up to 10% cashback to Rewards Wallet from over 150 retailers
- Cashback can be earned on a variety of services, including debit payments, insurance, mortgage, loans, and life insurance
- Participation costs £4 and requires at least £800 to be paid into the member’s account every month
6. ICBC – Reward Program
Chinese banking company ICBC offers a simplified loyalty program, with a focus on travel rewards, but the company’s partnership with a large number of agencies makes it a worthwhile choice for customers:
- The Reward Program offers users 1 point for every HKD/RMB spent with their ICBC credit card
- Points can be redeemed for a cash discount, cash coupons, air miles (Air China PhoenixMiles, Hong Kong Airlines Fortune Wings Club Miles, China Southern Airlines Sky Pearl Club) and charity donations (Caritas – Hong Kong, Yan Oi Tong Charity)
- Points are valid for one year
Members of ICBC’s Reward programs must fill out a Redemption Form and send it in by mail or (online) fax—something a next-gen loyalty management platform could easily digitalize.
7. Capital One – Purchase Eraser
Capital One, the American bank holding company, allows their customers the make travel-related purchases with their rewards card, then wipe out the cost of that purchase from their statement using their accrued miles:
- Customers can earn miles on every purchase everywhere and redeem for all kinds of travel related shopping and enjoy unlimited cash back rewards
- Points can be redeemed when shopping at Amazon.com or paying with Paypal
- Rewards don’t expire for the life of the account
8. Zions Bank – Pays for A’s
The financial services loyalty program of Zions Bank is dedicated to middle school and high school students. It offers money deposit for each “A” on the student’s report card:
- In order to participate, students should bring their most recent report card
- For every “A,” they’ll get $1 deposited into a Young Savers Account
- Getting paid for an “A” enters the student for the chance to win a scholarship savings account
You Can Bank on Customer Loyalty
As you can see, loyalty programs are multifunctional tools that can drive multiple KPIs for financial services. With the right mindset and fitting loyalty technology, advancing in digitalization and standing out from the competition will no longer be a difficult task. If you’re interested in learning more about loyalty programs and how they are implemented, our definitive guide is a worthwhile read.