Rethinking loyalty: why banks must go beyond the product.
By Diana Arizaleta (Senior Consultant)
Customers now expect more from financial services providers and are far more willing to switch or split their financial lives across multiple providers. This shift is driven not only by cash incentives, better rates, or slicker apps, but by a growing demand for services that remove friction and offer clear value. As a result, traditional banking relationships are no longer enough to secure loyalty.
The loyalty challenge
Continued innovation in financial services has eroded the idea of a ‘one-stop-shop’ bank. Today’s consumers are happy to spread their financial products across multiple providers, depending on where they find the most value. And while many banks are responding - often by improving the user experience of individual products or matching competitor offers - these product-level changes alone rarely build lasting loyalty.
Even traditional rewards programs are losing their power to drive deep or sustained relationships. To put it another way, loyalty is no longer a ‘feature’ - it’s an outcome, and it can’t be achieved through siloed improvements.
Loyalty is holistic
To build meaningful loyalty today, banks must think more broadly. What truly drives customers to stick with a provider is a combination of:
- Ease of use: Seamless digital journeys and intuitive interfaces
- Transparency: Clear communication around fees, data usage, and values
- Perceived value: Benefits that feel relevant, personalised, and worthwhile
- Emotional resonance: Alignment with customer values and lifestyle
These factors work together to create an experience that customers trust and return to - not just for a single product, but as their financial partner. And to get that right, banks need a deeper understanding of what customers want, need, and value. That’s where insight becomes an essential tool.
Why siloed thinking doesn’t work
Improving the experience of a single product (no matter how well) isn’t enough. That’s because customers don’t view their bank in parts. They judge it based on the sum of all their interactions, comparing it not just to other banks, but to every digital experience in their lives.
This is why internal alignment matters. A joined-up, insight-driven strategy that brings together product, marketing, UX, and customer service is more likely to deliver the kind of coherent, relevant experiences that build loyalty over time.
What leading banks are doing differently
Some providers are already rethinking loyalty through this lens. At the single-product level, Monzo and Lloyds offer customisable accounts and tools that help customers feel in control and informed. Amex rewards specific behaviours, building satisfaction around spend.
But the strongest examples take a provider-level view of loyalty. Bank of America’s Preferred Rewards program connects products across the customer’s financial life, rewarding engagement across current accounts, mortgages, savings, and credit. It’s a relationship strategy, not just a product one, and it’s powered by insight.
The role of customer insight
Insight is the foundation of a truly effective loyalty strategy. It helps banks:
- Understand what customers really value (not just what they respond to)
- Identify drivers of satisfaction, trust, and churn
- Tailor experiences by segment, behaviour, or life stage
- Benchmark against competitors' strategies
- Test and refine new ideas before scaling
It’s not about pure data, it’s about meaning. Qualitative and quantitative insights help banks connect the dots between customer behaviour, unmet needs, and strategic priorities.
Common challenges
Despite best intentions, many banks still struggle to foster lasting loyalty. One of the key issues is siloed data and disconnected systems, which prevent teams from gaining a clear, unified view of the customer. Trust and security concerns continue to be a barrier, especially when customers are expected to share personal and financial information. Even when digital tools are available, the experience is often inconsistent or outdated, leading to frustration and disengagement.
Another common challenge is the lack of clear communication around rewards, benefits, or value propositions, meaning customers may not even realise the full advantages of staying loyal. On top of that, limited personalisation, often due to incomplete data or a lack of insight into different customer segments, can make offerings feel generic and unconvincing.
Ultimately, these challenges stem from a lack of integration, both in systems and in thinking. Without addressing them, banks risk offering fragmented experiences that fail to build the trust and emotional connection needed to earn long-term loyalty.
Conclusion
Loyalty in banking isn’t won through transactions anymore, it’s earned through relevance, trust, and value across every touchpoint. That means looking beyond the product and building strategies rooted in customer understanding.
Banks that use insights to design cohesive, transparent, emotionally resonant experiences will be the ones customers stick with through good times, hard times, and everything in between.
If your bank is grappling with these loyalty challenges and looking for a more effective, insight-led approach, we can help. At KAE, we work with financial services providers to uncover what truly drives customer behaviour and translate that into strategies that create lasting value and deeper loyalty.
Feel free to book a call with one of our experts to explore how we can support your team in building more connected, customer-centric experiences.