“Emotional connection” has been the basis of bank loyalty for generations. The relationships customers developed with bank employees, the quality of in-person customer service, and the deep-seated trust in depository institutions have all contributed to the popularity of neighborhood banks. 1:1 human interactions drove a high degree of customers’ emotional attachment.
Today, many neighborhoods no longer have a bank. 4% of all retail banks closed for good in the last year. With the shift away from the physical to digital, accelerated by the pandemic, the emotional connections customers had to those institutions are beginning to fray. Banks are now left wondering how to provide that corner bank feeling—that human connection—but through digital channels. They must think digital but relate on a personal level.
Four Drivers of Bank Loyalty
While personalized digital experiences can help deliver immediate loyalties, establishing emotional attachment with customers increases the chance for a lifelong relationship. The question to answer is not IF banks should aspire to emotional connections with their customers but HOW they can make banking personal.
Before we go further, it is important to better understand the emotional drivers of loyalty. In contrast to functional drivers such as digital experiences, rewards and offers, and customer service, emotional drivers aren’t as explicit in nature. To help frame emotional connection in banking, we’ve identified four key drivers:
- Values alignment: “This bank stands for the same things I do.”
- Self-image building: “This bank cares about the planet, so do I.”
- Social connection: “My friends like this bank, so I might too.”
- Aspiration and life goals: “Connecting with this bank gets me closer to who I want to be.”
Generational Customer Journeys
The first step to building emotional connection begins with putting the specific customer’s best interests at heart. While exact interests will differ from customer to customer, we can look at where customers might be in their life journey to identify which emotional drivers to leverage.
For younger customers looking for banks that build their self-image and drive the social connections they crave, Venmo is a great example of a digital banking solution that delivers both and has found rapid adoption and utilization. Venmo’s ability to turn something as trivial as sending someone money into a fun, community-driven experience helped them build strong affinities with younger generations with 9 out of 10 college-age consumers using Venmo. During the pandemic, its contactless payment and money transfers helped users avoid in-person banking, further expanding its likeability.
Millennials and Gen Z are more inclined to support a bank that aligns with their values and helps them work towards their financial goals, as well as guiding and educating them on their journey to achieving them. It should come as no surprise that these two generations invest in social causes just as much as stocks and bonds. 75% of Millennials would support businesses and causes in response to social protests. Banks like Wells Fargo are tapping into these emerging trends by utilizing their Instagram presence to connect with Millennials on issues of diversity. The potent combination of social media and social justice has given Wells Fargo a platform to reiterate its commitment to causes that matter to its customers, including showcasing the diversity of its workforce.
Millennials and Gen Z also have a strong appetite for financial education since they know it will help increase their likelihood of achieving their financial goals. According to one study, Millennial and Gen Z customers selected a financial institution based on whether or not it offered access to credit monitoring tools to help them better understand their credit scores. Banks are now in the business of not just providing financial products and services, but of fostering a better customer, one well-equipped for a lifetime of wealth accumulation.
As a result of the pandemic, many Baby Boomers have found themselves adopting digital banking solutions. Many didn’t receive adequate onboarding or education in how to effectively use mobile banking. Over-indexing on mobile banking risks alienating emotional connections to Baby Boomers who find personal and human interactions with companies to be a part of their identity. Expanding the concept of mobile banking to telebanking helps bring the “human” back into the customer experience. Allowing Baby Boomers to chat with an individual instead of a chatbot while creating a seamless omnichannel experience will help financial institutions build emotional attachments with this cohort.
Rewards, points, functional benefits, and value adds are just one piece of the puzzle that is bank loyalty; the other piece of the puzzle are emotional connections. Building emotional connections or attachments with customers starts and ends with their interests. To take the digital and make it personal, banks must leverage their data and customer insights to build a deep understanding of each unique customer. They’ll also need to tap into the emotional drivers that resonate with each generation. Bringing it all together will ensure relevance in a rapidly changing financial sector.
Executive Vice President