Loyalty Blogs

It’s not ease or convenience that tops the chart in building bank loyalty programs, but the customer experience (CX) determines whether customers stay with a banking business or leave. A recent study showed that CX has a greater impact on customer loyalty than convenience or other benefits.

Bank loyalty programs work a bit differently than in all other industries. With digital-first banks growing significantly, traditional banking has more than one aspect to look after. This blog will discuss ways to create effective bank loyalty programs in 2024 to win long-term customer loyalty.

Bank Loyalty: An Overview

The global retail banking market is expected to grow at a CAGR of 7.81% and reach USD 1615.78 million by 2027. The opportunities are massive if banks succeed in building effective customer loyalty.

It’s a well-thought-out marketing strategy to engage and retain customers, acknowledging their association with the brand. Loyalty programs can help banks improve customer relationships, understand customer needs, and offer personalized products and services. The need of the hour is innovation to improve CX to retain customers.

Before we discuss the top ways to create successful bank loyalty programs, let’s understand the pain points of financial service providers regarding loyalty management.

Why Loyalty Management is Difficult in the Banking Space? In our experience of helping renowned brands like IDBI, NPCI, and many others with loyalty management, we have closely observed the common challenges faced by banking players. Let’s shed some light on these pain points to understand where the gaps are.

1. Bottleneck Competition

The B2B banking space is a tight spot. Due to technological advancements, the big players are gaining an advantage, leaving others desperate for innovation. However, it isn’t as easy as it sounds to join the fintech wave. Loyalty software for banks requires expertise and due diligence. There’s an ongoing contest to join the bandwagon while still tackling ambiguities around loyalty technology.

2. Evolving Customer Expectations

Customers are more aware than ever in this digital age. They want personalized experiences and instant gratification. Many fintech businesses struggle to deliver what their customers want. It happens due to a lack of relevant data and proper loyalty management.

3. Quick and Easy Migration

It’s as easy as downloading a new app to switch banks for customers. Banking services have come to their fingertips. If customers aren’t happy with the loyalty benefits, they are receiving, they won’t hesitate to switch banks.

4. Regulatory Requirements

The banking domain is hard to navigate because there are compliance and regulatory requirements. Managing loyalty can be a nutcracker because every campaign must comply with legal requirements, and marketing must go hand in hand with it.

These challenges aren’t hard to navigate if you approach bank loyalty with discretion. What works for other industries might not work for banking, as it deals with deliverables involving trust, confidentiality, tangible benefits, and legal frameworks. Let’s discuss the loyalty programs for banking and how they work.

Loyalty Programs for Banking Businesses

Here’s a comprehensive list of loyalty programs that can cater to the specific needs of the banking domain.

Point-based Programs

Point-based loyalty programs are still the gold for banking businesses. Customers are rewarded with points based on their purchase size. They earn reward points for doing banking with the company and can redeem these points for purchasing different products and services. These reward points can also be redeemed for special discounts and offers.

Highlights

· Points can be easily accumulated by customers.

· Points can be redeemed in a wide range of categories.

· There’s great flexibility in the redemption methods.

Tiered Programs

One of the best ways to encourage customers to do more transactions with your bank is by introducing tiered loyalty programs. This program has levels and encourages customers to spend more. After completing certain milestones, customers move to Tier 2 and unlock new benefits, offers, and deals.

Highlights

· Loyalty benefits are provided based on spending levels.

· Tier progression keeps customers engaged.

· It caters to banking needs as it incentivizes even small transactions.

Cashback Programs

Every customer loves cashback wins. With cashback programs, banks can prompt customers to make transactions with the bank, enhancing their chances of winning more cash. Every time a customer swipes their card or makes a UPI payment, they get a chance to win cashback.

Highlights

· Customers earn an amount of cash back from a range of their transactions.

· Cashback can be credited back to the account or reused within the app to make another payment.

· It provides tangible and instant gratification for everyday transactions.

Exclusive Benefits

Your most loyal customers deserve something extra. If a customer has been banking with you for a long time and has made transactions now and then, they deserve exclusive benefits like discounted loans, airport lounge access, and much more. These exclusive benefits not only reward loyal customers for their ongoing commitment but also create a sense of exclusivity and appreciation.

Highlights

· These benefits are highly personalized.

· They demonstrate the bank’s recognition of individual customer loyalty.

· Exclusivity works as a strong incentive for customers, leading to customer retention.

Coalition Programs

2x points on shopping with certain brands using a card or teaming up with another business to bring ease to your customers; coalition loyalty programs foster mutual benefits. Partnerships can be formed with other financial services companies, retailers, and platforms.

In a nutshell, banking loyalty programs are all about personalization and instant gratification. Even though accumulated points are widely utilized in loyalty programs, the growing adoption of other programs cannot be overlooked.

Master Bank Loyalty with Novus

Novus Loyalty has proven expertise in managing loyalty programs for banking businesses. Our fintech excellence can be ascertained through the fact that Novus has won the award for delivering excellence in finance at the FiNext conference 2024 in Dubai. From real-time point earning to a self-service support portal, Novus has helped leading banks build seamless customer loyalty. So far, Novus has helped banks and fintech companies cater to around 40 million customers, generating $100 million in transactions per month. With almost 1 million transactions per day, we have helped some of the biggest banking sharks, like NCPI, IDBI, IDFC First Bank, and Equitas Bank, ace customer loyalty. If you’re looking for reliable loyalty software for your bank, Novus has got your back. Get started with Novus today.