Supporting Customers during Economic Downturns: How Financial Institutions Can Foster Loyalty

Supporting customers during economic downturns is essential for maintaining loyalty and building long-term relationships.

According to J.D. Power's 2022 U.S. Retail Banking Study, customers are more loyal to banks that deliver a meaningful customer experience and make efforts to support them in challenging economic times. In fact, 63% of customers said that if they received this kind of support from their financial institution, they "definitely will not switch banks," and 78% said they "definitely will reuse their bank."

But what does this kind of support look like in practice? When asked how they expect their primary financial institution to support them during a recession, consumers indicated that they would be interested in additional personalized services, such as recession strategy planning and one-on-one financial planning.

To provide this kind of support, financial institutions must be able to effectively use data about their customers to understand specific needs and preferences. This could include information on customers' financial goals, risk tolerance, and previous interactions with the institution. By leveraging this data, financial institutions can create tailored recommendations and support for each individual customer.

However, another recent study by Forrester and Blend found that "financial institutions have fallen behind other industries in effective personalization." To close this gap, financial institutions must go beyond merely using a customer's name in an email. Instead, financial institutions must tailor products and experiences to meet individual needs and preferences.  

Solutions could include personalized credit card designs or co-branded credit cards with benefits based on customers' existing affiliations. It could look like recognizing and celebrating important life and career milestones, such as birthdays and anniversaries. Through personalization, financial institutions can demonstrate that they know and understand their customers as people with unique situations in order to build the trust and communication that will open opportunities for deeper relationships.

In addition, consumers are increasingly expecting a consistent experience across all channels, whether they are interacting with a financial institution in-person, online, or through mobile. Providing a seamless and unified customer experience across all channels is crucial for building trust and loyalty.

To meet these evolving customer expectations, financial institutions must also focus on improving their digital adoption. This includes investing in digital platforms and tools that make it easier for customers to manage their finances and access the services they need. According to a survey by American Banker, nearly three-quarters of consumers are willing to share their data to receive personalized customer benefits. By using this data to better understand and serve their customers, financial institutions can create a more personalized and relevant customer experience.

By using data to understand each customer's specific needs and preferences and investing in digital tools and platforms to make it easier for customers to access services, financial institutions can differentiate themselves and create a truly personalized customer experience.

Tools like Strum Platform, which provides data-driven insights to help financial marketers better understand their customers and create tailored experiences that meet their needs, are often the key to unlocking the power of the data that financial institutions have on their customers but are not yet fully leveraging.