Thanks to the Fintech revolution, many banks, credit unions, and financial institutions are at risk of losing their current members and clientele. Recent studies have shown that 1/3rd of all people may switch their primary banking provider in the next year. Thanks to many banking providers offering free checking and savings accounts with no monthly fees, people are likely to just keep opening new accounts without ever closing their old accounts. Therefore, a person would still have his previous account open but rarely use it. This is known as “invisible migration”.

The most well-known statistic is that the cost of acquiring new customers is up to 7 times higher than the cost of retaining existing clientele. Therefore, it is in everyone’s best interest to retain the people who are already a part of the bank, financial institution, or credit union. This means being more competitive in the banking services provided, and keeping current users as happy as possible. This article will explore five of the most effective strategies used in the banking industry to retain their current book of business.

However, before we dive into the different retention strategies, it may be important to define the three types of customers or members that the banking industry deals with on a daily basis:

New customers/members: These are the ones that require the most effort to retain. They have just recently been onboarded, but there is no loyalty established and if they don’t like the services they may very quickly change to their previous banking provider (or a new banking provider.

Existing customers/members: These are the ones that have already been with their current banking provider for a while. They know that changing their primary banking account is a lot of effort, and are usually happy with the current banking services that they have. These offer ample chances to cross-sell other existing banking services, increasing the value of the customer or member.

Exiting customers/members: These are the ones that have already left their primary banking holder. These are the toughest to win back, as there is probably a reason why they left in the first place. Therefore, it is recommended not to spend too much time or effort winning back this customer/member group. Usually, a simple newsletter showing how the bank, credit union, or financial institution has improved over time is the best that we can do.

Now that we know the three different types of customers/members that exist within the banking industry, let’s explore which strategies may help banks, financial institutions and credit unions to retain a larger portion of their existing clientele:

Know your customers/members

This may sound obvious, but many financial institutions forget that not everyone is the same. In this interconnected day and age, people are looking for more personalized banking services that fit their needs. There are general trends that surface, such as delivering improved mobile banking services and ensuring speedier times for transactions, but the best way to retain a certain customer or member is to know his wants and needs, responding to these wants and needs at the highest possible capacity. By knowing who is using your banking services, you can find out where they are looking for improvements and where they still need more work. This can help direct where the R&D funding should gogo to.

Complete transparency and honesty

Long gone are the years when banks, credit unions, and financial institutions can sneak hidden fees, charging their customers/members wrongfully for every small little mishap. A great example of this is the mean overdraft fee schedule that many banks have: although it is true that the bank has a full disclaimer of the overdraft fee, it is always hidden deep in the paperwork. This makes certain banks, financial institutions, and credit unions become untrustworthy. It is always better to be honest from the start, in order to avoid paying high acquisition costs followed by even higher retention costs. It is better to be transparent from the beginning about hidden costs than making the clientele angry after.

Offer sporadic one-time promotions

People love it when they are randomly rewarded for completing simple tasks. Many successful newcomers in the banking industry bring these one time promotions to a whole new level. For example, some banks offer a $100 referral bonus when people successfully get their friends and family to join their bank. Other banks offer special rewards for long-term checking customers. Yotta has a fantastic model where people have a chance to earn money just by depositing money in their bank accounts. These sporadic promotions and offers for existing members/customers keep everyone engaged with their banking services, while giving them an extra reason to not change their primary account holder: they want to keep earning those rewards and promotions!
Show that you care about their financial health

As time goes on, people are starting to enjoy banks, credit unions and financial institutions that are more than just simple checking accounts. They want a place that can help them grow and become financially free. They want the customer service to help them figure out what the best ways are to manage their money. They like being helped, and hate simple banks that don’t encourage them to manage their money better. Many different FinTech startups have been offering more and more services showing that they care about their current clients through newsletters, smart financial tips, certain rewards for people who are managing their money properly, and more! The best part about helping someone become financially healthy is that it ensures that they will be more loyal to their current banking provider. This banking provider helped them become more financially independent, so why would they ever change?

Offer a stellar banking experience

Offering a stellar banking experience that is different and better than all other banking services can help you differentiate yourself from the crowd. This creates true loyalty, as people will never want to leave because they are already with the best banking experience that they have ever had in their entire lives. This would start with a fantastic, speedy and reliable bank onboarding process, followed by a beautiful mobile app and incredible customer service. The big idea is that if all current customers/members are aware of the fact that their banking services are better than all of their competitors, then they will have no reason to switch. They may even convince their friends and family to join, too!

The most important element to retain customers/members

The most important element that will help banks, financial institutions and credit unions to retain their existing customers/members is by providing a stellar banking experience. The first impression is very important and starts with the bank onboarding process. Therefore, it is impervious to have the smoothest, most user-friendly experience possible when onboarding new prospects. NimbleFi provides incredible onboarding solutions that can fit perfectly into any bank, credit union or financial institution’s current framework. Unlike most clunky and disorganized onboarding solutions, NimbleFi can get a prospect onboarded from start to finish in less than 15 minutes! Thanks to new KYC technology and simple form filling methods, NimbleFi enables a prospect’s first interaction with your bank, credit union or financial institution to be as painless as possible!

Banks, credit unions and financial institutions are known for being notoriously late adopters for new technologies and systems. A great example of this is the clunky and disorganized onboarding systems that many financial institutions have set up today. The financial brand Digital Report showed in a study that 47% of organizations still have no formal onboarding process. This lack of formal onboarding processes can lead to disorganized, complicated and lost applications for many prospects that are actually interested in opening an account with the financial institution, credit union or bank. This can cost the financial institution a significant amount of business, as onboarding new members is a tricky and costly feature for banks, credit unions and financial institutions. Furthermore, proper onboarding can lead to higher retention rates and better satisfaction from clients, members and customers. This article will show how greater onboarding systems can increase business by as much as 40%.

The Greatest transfer of wealth in history

It is a well-known fact that Baby Boomers will soon lose their position as the richest generation in the world. As families age, parents will start handing their wealth down to their kids. This wealth will be created on top of the wealth that the children have already developed and amassed, leading to even larger amounts of wealth held by younger generations. Forbes estimates that the millennials will inherit $68 trillion from their Baby Boomer parents by the year 2030. Therefore, a major focus for any bank, credit union or financial institution should be to respond to the banking needs of the millennial generation. This generation gives banks, credit unions, and financial institutions great opportunities for new and exciting business.
Now, the greater question is how to capture this millennial generation: what they are looking for from their financial institution, what are their wants and needs, and who tends to be their current banking provider.

What millennials want from their financial institution

Many studies show that millennials have different banking needs compared to their parents. They want extremely speedy banking services, accessible from anywhere and prefer banking mainly using mobile devices. This is how so many branchless banks made during the FinTech revolution have performed so well: they understood that the banking needs were changing, and therefore adapted their banking services to the future generation. This allowed a complete change in the way that financial institutions can become successful.
One element that millennials hate is lots of red tape and formal services. Millennials hate banking in general (except for getting jobs) because they don’t like standardized procedures and restricting their freedom. FinTech captures this by having the process be fully online, which makes the millennials feel like they are being independent and in charge of their own finances.
Of course, this millennial wave is seen by the current level of overall satisfaction that people have with their current banking provider: 31% of people are unsatisfied with their current banking provider, and 15% are actually thinking of switching in the next 6 months!

Millenials are ready to switch their checking and savings accounts, presenting a tremendous opportunity to acquire new business

This presents one of the most tremendous times in history to go ahead and snag new prospects, as people are more and more willing to switch their current banking provider compared to before.

The importance of onboarding

Onboarding is technically the first experience that a prospect will have with the bank, credit union, or financial institution, so it is imperative to make that experience as exquisite as possible. It is well known that first impressions are the impressions that last the longest, and the first impression is done through bank onboarding.
For the average financial institution, it can take up to 26 days to onboard a new prospect. In this day and age where the average person’s attention span is shorter than that of a goldfish, 26 days is simply too long and many people will end up abandoning their application.
Although digital onboarding is important, if it is not properly designed or takes too long then there are significant risks that the application will become abandoned. It has become clear that Gen-Z will not support a poor onboarding experience. This is best shown by the fact that 68% of Europeans have abandoned a digital banking application that they started. This is not a great scenario, as the people who abandon their application have already gotten a bad experience with the bank, credit union, or financial institution, and therefore will be much tougher for new prospects to try to win back. Since first impressions last the longest, a poor onboarding experience can lead to many, many abandoned applications. Banks, financial institutions and credit unions may not even be aware of the massive amount of potential business that they are losing due to poor bank onboarding systems.

How onboarding can be improved
It is understandable that many financial institutions may believe that onboarding takes so long due to the fact that the banking industry is highly regulated, and therefore everyone must go through a specific process in order to validate their account and ensure that they are eligible for the account, loan or banking service that they are applying for. However, thanks to automated banking compliance software and services that exist nowadays, all compliance measures that used to take many days can now be completed in minutes!
It is easy to comprehend why many banks, financial institutions and credit unions loathe innovation. These financial institutions handle money, and want to take the least risks possible with their money. This is understandable, as tech can fail often without consequences, but when banks fail it can cause an economic collapse. Financial institutions do not have room to fail, therefore they must use what already works. Whatever bank onboarding system they have in place works, so why change?
The reality is that new bank onboarding systems are simple to implement, and can assist a bank, financial institution, or credit union in acquiring much, much more business. Better digital onboarding experiences can experience a 40% higher conversion rate, and since the majority of the people who onboard digitally are millennials, this means that the prospects onboarded have a much larger customer lifetime value compared to other prospects that exist.

NimbleFi, the all-in-one bank onboarding solution

NimbleFi is a Fintech company that can help your bank, credit union or financial institution get up to date with the current Fintech trends and technologies. The #1 pain for banks, credit unions and financial institutions for the past 3 years has been bank onboarding, therefore solving this pain is NimbleFi’s primary focus.
With NimbleFi, a prospect can be onboarded from start to finish in 15 minutes or less! Thanks to advanced KYC methods that are more than 98% accurate and that take less than two minutes, the prospect can move his application at blazing-fast speeds! Furthermore, unlike most bank onboarding system solutions that require the financial institution to completely change their architecture in order to implement their Solution, NimbleFi provides a plug-and-play solution that will fit any bank, credit union or financial institution’s current architecture!
The best part with NimbleFi is their ease of implementation and wide array of services. From bank core connection services to improving banking onboarding systems, NimbleFi can provide all of your FinTech needs in one simple process! The best part with NimbleFi is that unlike its competitors where the solution can take multiple months to implement, NimbleFi can have its solutions running within 48 hours!