# How to maintain customer loyalty and trust in the face of a pandemic and digital competition Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2021-03-08 Category: BANKING Category URL: https://financedigest.com/category/banking Meta Title: Challenger Banks vs Traditional Players: The Evolution of Meta Description: Explore the impact of challenger banks on traditional institutions and learn how banks can modernise to meet customer expectations in a post-pandemic world. URL: https://financedigest.com/how-to-maintain-customer-loyalty-and-trust-in-the-face-of-a-pandemic-and-digital-competitionhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/untitled-design-72-1736838535391-compressed.jpg) _By **Andrew Warren,** Head of Banking & Financial Services, UK&I at Cognizant_ There has long been a paradox at the heart of the financial sector – customer loyalty remains high despite [overall trust in the banking system being very low](https://yougov.co.uk/topics/finance/articles-reports/2018/08/29/ten-years-after-financial-crisis-two-thirds-britis). In any other sector, low trust would lead customers looking for services elsewhere. Generally, however, the major banks have been able to retain their clients despite, rather than because of, trust. This customer loyalty does not always pay, with research suggesting consumers could be [overpaying by £2.9bn](https://www.ft.com/content/bf5f7a44-91e6-11e9-aea1-2b1d33ac3271) in areas such as mobile, broadband, home insurance, as well as, notably, mortgages and savings. Whether the result of customer lethargy, lack of awareness of the possible cost savings or low expectations of the [service banks](https://www.financedigest.com/the-gmp-cell-banking-service-market.html "The GMP Cell Banking Service Market") provide, this has encouraged complacency in the banking sector. This could, however, change as our post-pandemic [reality begins to bite](https://www.financedigest.com/stocks-slump-to-2-year-low-as-rates-reality-bites.html "Stocks slump to 2-year low as rates reality bites"). People may have used the extra [time from the lack of a commute to do some research](https://www.financedigest.com/automotive-timing-chain-and-belt-market-to-be-valued-at-us-10-20-bn-by-2027-comprehensive-research-report-by-fmi.html "Automotive Timing Chain and Belt Market to be valued at US$ 10.20 Bn by 2027 – Comprehensive Research Report by FMI") and shop around for better alternatives, as well as harbouring frustrations over a perceived lack of support in recent months. Coupled with the possibility of a period of [negative interest rates](https://www.theguardian.com/business/2020/may/21/what-would-negative-interest-rates-mean-for-mortgages-and-savings), we could soon be heading towards a perfect storm, where both retail giants and small local businesses start to question the value their banks actually provide. **Switching has never been easier** One viable reason for the supposed [loyalty consumers have towards the major banks](https://www.financedigest.com/how-will-the-introduction-of-digital-banking-impact-customer-perception-and-overall-loyalty.html "HOW WILL THE INTRODUCTION OF DIGITAL BANKING IMPACT CUSTOMER PERCEPTION AND OVERALL LOYALTY?") has been the lack of real alternatives. With all of the traditional high street institutions offering [services that were largely interchangeable, switching services seemed more effort than was really worth it when perceived benefits](https://www.financedigest.com/how-guest-blogging-service-benefits-your-small-business.html "How Guest Blogging Service Benefits Your small Business?") were so minimal. However, this changed with the arrival in recent years of challenger banks such as Monzo, Starling and Revolut, which [continue to grow in popularity](https://www.thisismoney.co.uk/money/saving/article-7916949/Bank-switch-figures-Monzo-Starling-add-28-500-new-customers.html) due to ease of use and better customer experience from sign-up through to their intuitive apps. The primary advantage of the [big banks](https://www.financedigest.com/factbox-big-banks-expected-to-rack-up-more-than-1-billion-in-fines-for-whatsapp-use.html "Factbox-Big banks expected to rack up more than billion in fines for WhatsApp use") is their liquidity, historical reputations and longstanding customer base. However, the agility and user-friendliness of the challengers is shifting the landscape, and the continued reliance on legacy systems leaves the traditional players struggling to surpass, or in most cases match, the [innovative services](https://www.financedigest.com/accelerating-financial-services-innovation-with-the-promise-of-data-mesh.html "Accelerating financial services innovation with the promise of data mesh ") and products fintechs are able to bring to the market. **Modernising to [meet new customer expectations](https://www.financedigest.com/how-omnichannel-cx-can-help-insurers-meet-customer-expectations.html "How omnichannel CX can help insurers meet customer expectations")** As personalisation and smooth technological integration in other sectors, such as retail, raises expectations of similar offerings across all [service industries](https://www.financedigest.com/how-digital-identity-verification-will-revolutionize-security-defenses-in-the-financial-services-industry.html "How Digital Identity Verification Will Revolutionize Security Defenses in the Financial Services Industry"), this could soon become a key battleground for banks. ![Andrew Warren](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/andrew-warren-450x431-1736838535221-compressed.jpg) Andrew Warren With the challengers currently looking better equipped to respond to these consumer needs, here are some of the steps banks can take to modernise their offerings and retain [customers’ loyalty:](https://www.financedigest.com/financial-companies-delivering-better-value-for-customers-in-loyalty-programmes-compared-to-other-sectors.html "Financial companies delivering better value for customers in loyalty programmes compared to other sectors") - **Understanding people, not just the data** – the financial [sector](https://www.financedigest.com/how-embedded-insurance-can-drive-growth-and-value-for-the-insurance-and-finance-sectors.html "How Embedded Insurance Can Drive Growth and Value for the Insurance and Finance Sectors") has long favoured data science in its behavioural analysis. Almost anyone can [understand basic data; it is how semiotic algorithms can be used alongside this that will reveal real insights that can be used simply to help understand people better, their fears, their hopes and their aspirations](https://www.financedigest.com/understanding-the-realities-of-payment-data-monetisation.html "Understanding the realities of payment data monetisation"). - **Bringing the customer journey into 2021** – the lockdown has, by necessity, modified and in some cases accelerated, many of the established habits of both [individuals and businesses](https://www.financedigest.com/prime-bank-and-agam-spark-lending-revolution-for-individuals-and-business.html "Prime Bank and AGAM spark lending revolution for individuals and business"). These range from an increased adoption of [cashless payments](https://www.financedigest.com/why-ev-charging-stations-need-to-accept-open-cashless-payments.html "Why EV Charging Stations Need to Accept Open Cashless Payments "), to remote working, the propensity for saving vs investing, attitudes towards fraud and risk appetite, and loyalty. As a result, some customer journeys, which had become the cornerstone of banks’ or lenders’ strategies, will now need to be adapted. For example, products, [pricing and customer treatment strategies](https://www.financedigest.com/global-compressor-controllers-market-outlook-2021-pricing-strategy-industry-latest-news-research-report-analysis-and-share-by-forecast-2028.html "Global Compressor Controllers Market Outlook 2021, Pricing Strategy, Industry Latest News, Research Report Analysis And Share By Forecast 2028") will need to be updated, and the entire value-chain of customer touchpoints should be digitally enabled. Financial [institutions](https://www.financedigest.com/top-5-security-technologies-that-every-finance-institution-workplace-should-consider.html "Top 5 Security Technologies That Every Finance Institution Workplace Should Consider") will now need to ensure speed and quality of their response to this change. - **Embracing innovation** – the systemic advantage the [big banks have over more agile challengers](https://www.financedigest.com/big-bank-ceos-to-sell-lawmakers-on-relief-diversity-efforts-amid-economic-regulatory-challenges.html "Big bank CEOs to sell lawmakers on relief, diversity efforts amid economic, regulatory challenges") is in liquidity access. It is an advantage that potentially will be scrutinised in the COVID-19 enquiries we can expect to see in the near future, particularly around the provision of the various governmental [support](https://www.financedigest.com/where-do-small-businesses-turn-when-government-support-dries-up.html "Where do small businesses turn when government support dries up?") schemes and loans for which these big banks initially had responsibility. As that advantage then reduces, the need for real [innovation grows](https://www.financedigest.com/the-edible-oils-market-to-grow-on-an-innovation-revealing-spree.html "The Edible Oils Market To Grow On An Innovation Revealing Spree"). This means building [business models](https://www.financedigest.com/apis-open-banking-and-new-business-models.html "APIs, Open Banking and New Business Models") and deploying technology that can deliver value and differentiation. For example, the [major banks](https://www.financedigest.com/banks-deploy-ai-3-major-technological-advances.html "Banks Deploy AI – 3 Major Technological Advances            ") have more channels than their digital-only counterparts and, therefore, more data to draw on. The result is a better focus on customer journeys, with modern cloud-based [data management platforms](https://www.financedigest.com/mercedes-benz-and-microsoft-collaborate-on-supply-chain-data-platform.html "Mercedes-Benz and Microsoft collaborate on supply chain data platform") central to this. The quantity and detail of data can play in banks’ favour, allowing constant ongoing improvements to [customer communications](https://www.financedigest.com/why-poor-customer-communication-is-holding-open-banking-back.html "Why poor customer communication is holding open banking back") and simplifying self-service options in an increasingly remote world. It is important that banks continue to ensure they are thinking outside the box and [keeping pace](https://www.financedigest.com/winning-the-security-race-how-financial-services-can-keep-pace-with-cybercriminals.html "Winning the security race: how financial services can keep pace with cybercriminals") with other industries that are innovating in their response to the pandemic. - **Getting personal** [– technology is already helping to speed up processes and improve self-service banking](https://www.financedigest.com/scams-have-eroded-digital-trust-banks-need-to-do-more-to-combat-the-industrial-scale-of-scams-in-the-uk.html "Scams have eroded Digital Trust – Banks need to do more to combat the industrial scale of scams in the UK.") operations, particularly with predictive and smart decision-making through AI and ML. The advanced use of chatbots is an example, along with increasing tailored content and interfaces in apps and on [digital platforms](https://www.financedigest.com/choosing-the-best-digital-experience-platform-dxp-in-financial-services.html "Choosing the best Digital Experience Platform (DXP) in financial services"). However, the end goal is personalisation across the whole customer journey, not only through technology but also call centre operatives who still form a critical role in trouble shooting and need an up-to-date [view of the customer](https://www.financedigest.com/insurance-marketing-is-more-targeted-with-the-single-customer-view.html "Insurance marketing is more targeted with the single customer view") in order to be able to do their job. Technology can also help analyse how these human interactions can then become more personalised. The major [banks retain a crucial position in UK society for the support and confidence they offer their customers](https://www.financedigest.com/why-now-is-the-time-for-banks-to-use-their-data-to-support-customers.html "Why now is the time for banks to use their data to support customers"). However, as in so many other sectors, the coronavirus [pandemic could come](https://www.financedigest.com/are-financial-pandemic-restrictions-coming-to-an-end.html "Are Financial Pandemic Restrictions Coming to an End?") to be seen as a watershed moment in their evolution. With the challengers continuing to gain momentum, banks certainly cannot afford to stand still. It is the ability to have a data- and technology-driven approach, as outlined here, that can help them retain their dominance and justify [customer loyalty](https://www.financedigest.com/how-do-you-build-customer-loyalty-3-steps-to-follow.html "HOW DO YOU BUILD CUSTOMER LOYALTY? 3 STEPS TO FOLLOW") now lockdown is beginning to lift. Should they fail to do so, we may find ourselves in a very different landscape than we do today. By focusing on the steps above, [banks will start to level out the playing](https://www.financedigest.com/dont-play-second-fiddle-how-disruptor-banks-can-leverage-music-and-audio.html "Don’t Play Second Fiddle: How Disruptor Banks Can Leverage Music and Audio") field. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---