To generate new revenue, banks can also boost customer loyalty by redesigning their reward programmes to become more personalised, and integrated with e-commerce trends. Collinson Group's research found that less than half of consumers in Singapore feel they receive a high level of personal service, and only 35 percent of consumers feel that their bank 'knows and understands' them. Furthermore, Singapore consumers feel that their banks do not reward them for staying, citing that as the strongest reason for not feeling loyal to their bank.
Embracing and integrating modern e-commerce techniques with loyalty programmes to deliver relevant and motivating experiences across multiple channels will boost loyalty as consumers expect to be connected to their loyalty programmes and redeem their rewards anytime, anywhere. Other industries such as airlines and retail have been investing in offering more of these dynamic experiences with depth of content and tailored to customers' browse and search behaviour.
To sum up, increased customer engagement and satisfaction drives loyal behaviour and banks that embrace initiatives that deliver relevant, unique, fresh and timely experiences can expect to retain their customers and increase the bottom line, whilst forging relationships with merchant partners to share the burden of programme funding.
Does FinTech startups have a role to play in enabling traditional banks to meet the evolving customer needs?
The emergence of FinTech startups and the role that they play in the banking industry have created a debate around their role in the industry - whether it's a threat, or potentially an innovation partner. While it is understandable for banks to be concerned about their competitiveness in a rapidly changing marketplace and cautious of the services that FinTech startups bring to the table, we are seeing an increasing trend towards collaboration between the two. FinTech startups have the freedom to innovate and deliver digital experiences due to a lack of regulation on them as compared to traditional retail banks, and they are not restricted with the burden of legacy systems.
Consumers today not only demand a great digital experience, but also one that is personalised according to their needs and preferences. FinTech startups bring to the table their agile expertise in developing innovative services and products to improve and expand customer engagement. Conversely, FinTech startups can benefit from the bank's funding and infrastructural resources, but more essentially the expertise of banks to deal with regulatory and financial policy hurdles.
Other ways retail banks and FinTech startups can collaborate is to provide online platforms and tools like MoneySmart and GoBear, which educate customers on various financial advantages that a consumer can leverage such as managing their daily personal finances wisely. According to a 2015 MasterCard survey, Singapore sees the largest drop in financial literacy in Asia Pacific, falling from second to sixth place out of 16 markets, citing the fall in consumers' understanding of basic money management as the reason. These new digital offerings provide customers real value and can be selectively charged for.
Sign up for CIO Asia eNewsletters.