The year 2022 was dominated by big economic questions as people watched the mortgage interest rates increase dramatically and talks of an impending recession shadowed news cycles. Financial institutions also saw a variety of emerging trends regarding how customers interact with their bank accounts. Online interactions across all industries dominated the years defined by the worst of the pandemic. As regulations have begun to relax, however, banks have started to see how customer behavior will likely shift in the long term.
BAI Banking Strategies recently published a report exploring key areas that banks and financial institutions should note as they move into 2023. We will explore critical areas from this report that you will want to keep in mind as you formulate your strategy for the coming year.
What community banks and credit unions should know about account acquisition
Account acquisition plays a critical role in the health of any financial institution. Banks and credit unions need to focus more on creating campaigns that target different population segments with a greater need for personalization. There are definite differences in how the various generations interact with their banks. You can see some of these impacts in key statistics such as:
- Gen Z is the most willing to change their financial institution if the new bank could offer better digital engagement– nearly three-quarters indicated that they would make this switch.
- As you move towards the younger generations, people become increasingly less likely to open accounts in branches. Fifty-six percent of boomers say they prefer to use a branch, but that sinks to 20% for Gen Z. Younger generations prefer to open accounts online.
- An increasing number of customers have shifted their primary accounts to direct banks (without branches). Twenty-two percent of Millennials saw direct banks as their primary financial institution in 2021, but 34% did in 2022. For Gen X, that number increased from 16% to 27%. It also increased for Boomers. Only Gen Z saw a slight decrease.
Moving forward, banks need to note the differences between their various consumer segments and how they can differentiate themselves in the eyes of these segments. Direct banks have become increasingly popular across most generation demographics, meaning that banks need to determine how they can drive interest in their products.
An intriguing strategy that banks can use to build interest is to promote their internal values. Growing portions of the population, particularly younger generations, report that they like to do business with banks promoting values that align with their beliefs. Incorporating brand values that align with the target demographic can help you distinguish your institution from other options.
Banks can also look at ways they naturally differ from direct banks, specifically the ability to offer in-person service. Offering a value proposition surrounding personalized customer service can be another way to remind customers about the value of branch-based banks.
The role of technology for banks interested in building relationships
As part of working to improve account acquisition, banks should also note the role of technology in their efforts to build relationships with customers. Technology is critical in driving customer value and provides a concrete way for banks to distinguish themselves from the competition as we move into 2023.
One study cited by the BAI found that financial institutions miss almost 40% of their opportunities to engage customers fully. Many of these banks focus more on customer satisfaction and allow customer engagement to fall by the wayside. Although this can be a tempting path to take, the research also indicates that customers who are satisfied and fully engaged with their banks are more likely to remain with their financial institution.
Therefore, banks want to seize opportunities to drive customer engagement through technology. This engagement should take place across all available channels and platforms. You need to go deeper than just your basic demographic data to achieve this. You want to understand the types of educational opportunities and banking features that matter most to the different segments.
Dive into generational data, broader search data related to finance, and the success of various features from competitor banks. Create a complete banking experience. You want customers to engage with your institution as they learn about the financial topics that interest them, open accounts that advance them toward their goals, and receive personalized advice and information each time they interact with your bank. Driving engagement alongside satisfaction will be vital to maintaining customer relationships.
The digital experience will remain a challenge in 2023
As you begin to incorporate technology to build relationships, banks need to be willing to rise to the challenge of creating a robust digital experience in 2023. The BAI Banking Outlook survey did show that customers have noted some improvements in the digital experiences that banks offer. However, there is still a way to go for customers to express complete satisfaction. It is also important to note that across all generations, more than half indicate they would switch banks if they found an option with a better digital experience. Finding ways to keep customers happy when digitally engaging should be high on the priorities for banks moving forward.
Notably, all the generations come together to note that they want to see customer service available around the clock. If they have questions about their account or need to speak to someone about potential opportunities, they want the bank to answer them even outside standard operating hours.
Another common thread across generations is that customers want personal recommendations and information. The digital experience you create should be built around the customer’s needs, your segment data and insight, and the value you can offer a customer.
Note that other areas of the virtual banking experience do differ between customers. Specifically, Millennials want features like faster payments, and Boomers want capabilities to turn credit and debit cards on and off. Knowing the priorities and interests of your target audiences will help you build the optimal experience.
The resources you offer and promote to the customer, how you organize the main screen for customers logged into their accounts, and the communications you send to customers through an app or email should focus specifically on their needs.
The digital experience needs to be faster and more personal for customers to take note of your bank moving forward.
Important factors and trends to watch for moving into 2023
As you begin to plan your branding and marketing priorities moving into 2023 and beyond, there are five main factors you want to keep in mind that will help you incorporate the above points.
Trend 1. Build first-party data relationships
Know how your bank will operate in a post-3rd-party-cookie world. Currently, only just over a quarter of financial institutions report they have a strategy for marketing and customer engagement when cookies cease to serve as the primary form of customer tracking. Partnering with experienced brands accustomed to working with banks, such as Milestone, can be an excellent way to determine how you will build campaigns and digital experiences without cookies.
Trend 2. Socialize to personalize in your social accounts
Customers, as we have addressed above, appreciate personalization. They want to know that the financial institutions they work with genuinely care about their needs and priorities. Social media provides you with a platform to engage directly with these customers and demonstrate your attention.
However, banks need to take careful note of the tone of the different platforms and how they can use this channel to engage customers actively. Answering questions, providing educational resources, and promoting features and bonuses that interest the target social demographics can be a great way to get started.
Trend 3. Understand your customers’ saving priorities
Customers are clearly interested in promotions and bonuses that help them build their savings accounts. They like features such as promotions for switching financial institutions. Look also at the financial products you offer, such as credit card offers and the interest rate offered on everything from loans to financial accounts. Finding ways to promote your rewards and customer opportunities can build interest.
Trend 4. Prioritize personalization in email and on the site
Combine the insight from your customer data and demographic information to build a complete picture of your customers to provide better personalization. One survey found that 72% of customers engage only with personalized messaging, so finding ways to build personalization efforts can help you improve interest and engagement.
Trend 5. Evaluate and optimize your existing marketing stack
Existing technology can offer various helpful features that can engage your customers. For example, chat agents can empower you to offer 24/7 support to customers through your app or website.
Moving into 2023, banks and credit unions face a variety of shifting priorities from customers and growing competition from direct banks. Planning now how to build customer relationships, optimize the online experience, and acquire more accounts can help financial institutions like yours get set up for success.
Working with a team like Milestone can also take your efforts further. Our team can help you create the digital experiences you want to see for your bank or credit union. Reach out to get started now.