Retail banking shouldn’t be seen as an endless bout between between challenger and incumbent. Customers don’t view their experience in this way. Neither should you. People are seeking financial allies, not adversaries.

They don’t care about the issues that preoccupy most traditional banks – legacies, cost, regulatory pressures, models and machinations. They care about their own financial well-being. And the cost of living crisis, on the tail of Covid, means there are customers assessing how your bank – one of the guardians of that well-being – responds. Is your bank providing the products, advice, support and tools that meet their core needs? Are you part of an ecosystem that offers integrated financial and non-financial solutions at the right moment in their lives? No? Not yet? Then your customer retention numbers will go in the wrong direction. Intertia on switching used to be endemic. Not anymore.

Running the numbers

Consumers now hold multiple products with different providers. FinTech and big tech are just part of their financial ecosystem. A quick scan of the latest numbers from Revolut tells us that the bank is becoming an indispensable ally in that ecosystem for millions of customers.

At the last count, Revolut had 20m+ personal and 950k business customers around the globe. Each using a myriad of products to make millions of transactions per month. Let’s pause in Ireland for a moment. The tech company has been signing up customers there in their droves. It already has 1.9m+ customers and counting.

A perfect storm – here are some of the reasons why:

  • Ireland has one of the youngest populations in Europe, and younger customers are more likely to embrace a neo bank as they rely on cash less than older customers. (The average age of a Revolut customer is 39).
  • Revolut has a European banking licence that protects customers’ deposits
  • With Ulster Bank and KBC exiting the Irish market, over 1 million customers will change banks this year. Usually, only 30k customer change banks in the Irish market each year.
  • Regular announcements by traditional banks of branch closures and removal of services have heightened the perception that they are just in the market to make money and do not care about customers.
  • Following the financial crash and the government bailout of Irish banks. traditional banks have been poorly perceived by most Irish customers.
  • Transactions are instantaneous compared to other banks that usually take days to apply credits and debits to accounts.
  • Revolut does not advertise but incentivises existing customers to refer family and friends. As a result, most new customers are recruited by personal recommendation.

The trust factor

How does Revolut plan to keep its hard-won customers? The answer lies in the trust factor. But the reasons probably play out differently to how you think. Let’s stick with our Ireland example. Trust in FinTechs like Revolut, N26 and Bunq in Ireland is low. Research by Peopl Insurance found that just 18% of people had high trust in challengers like these. But this is no time for incumbents to breathe a sigh of relief. The figure was the same for traditional banks.

As Peopl Insurance CEO Paul Walsh points out, the mistrust in FinTechs could be rooted in the “novelty of the technology, low awareness of its functionality, concerns around cybersecurity and data uses and the lack of a bricks-and-mortar shopfront”. Digital brick by digital brick, Revolut is responding by hard wiring into its plan the loyalty drivers that build emotionally relationships. It knows that functional drivers – digital experiences, rewards and offers, and to some extent customer service – on their own won’t necessarily increase loyalty.

When we analyse the model that a FinTech like Revolut is creating, one that is rooted in customer intimacy and data, it becomes clear why they have an edge over incumbents in overcoming mistrust. Traditional banks have a limited time to respond.

How soon is now?

Let’s look at the numbers in a different way. Trust in challengers is growing. 37% of consumers now say a FinTech firm is their most trusted financial services brand, compared with 33% who name a bank as their most trusted brand, according to EY. This shift is driven by demographic needs. Older customers tend to trust a traditional bank as their primary financial provider and this trust dilutes as we move down the ages to Generation Digital – millenials and Generation Z, who are easy to attract but difficult to keep.

Some traditional banks only have a short window to work out their place in the customer financial ecosystem. The lines between challenger and incumbent are blurring. Customers will judge how well a provider understands them as an individual and makes things easy for them. Banks are racking their brains as to how they can stand out to boost customer loyalty. The effort will be worth it. A 5% increase in customer retention rates can increase revenues by anything from 25% upwards.

What can we learn about customer retention from Revolut?

1. Culture and behaviour are ground zero

Revolut is building a product portfolio layer by layer for personal and business customers. The tech company wants to “Deliver WOW” and “Put our customers first”. This is all textbook customer experience stuff. It’s only when we peel back the layers on how the company brings these promises to life does it become clear how the brand is earning the trust of a loyal customer base. And shoring up its customer retention numbers.

“We believe that any success at Revolut comes from two things: our people and our culture”

Revolut understands that what happens on the inside influences how customers behave on the outside. It knows that its people are the gatekeepers of its customer experience. Get customer support right and people will want to stay.

Ask – how can we best serve you?

Revolut Support is able to “Deliver WOW” by offering the “best help with quick answers and no fuss”. So far, so good. How does it endeavour to do this? By creating 12 specialist support teams using their knowledge of a specific area to deliver a consistent, personal, and responsive experience. There is no one-size-fits-all approach to service in Revolut’s world.

Teams understand the CX mission. They strive to answer customer queries with empathy. They take the time to make sure the customer doesn’t need to come back again with the same problem. This is not a time and motion exercise in resolving as many calls in as quick a time as possible.

Bank employees that are empathetic to individual needs and provide the right advice and support on how customers can protect their finances and reach their goals are better at building relationships that stand the test of time. Read more on the Revolut approach here.

2. Embed your products in customers’ lives

Revolut customers love to travel. While the travel industry was shut down during Covid, the company built in just nine months Revolut Stays – its new travel product. Customers are able to book accommodation, get instant cashback and choose to pay immediately or later. All from the app. Three days in Paris? A fortnight at the beach? Customers are offered pay-per-day travel insurance. Bill splitting makes it easy to share a meal. Perks and rewards increase for Premium and Metal customers.

Most of us have forgotten to cancel a subscription. Revolut’s answer? Give customers the option to add scheduled payments in the app to keep on top of their spend. And see where they can save. One click and any unwanted subscriptions are blocked.

3. SMEs, we’re here for you

Traditional banks usually balance CX with the cost to serve so they don’t invest in SME customers. Not Revolut. As we mentioned earlier, the tech company is nudging a million business customers. Fractured payment methods and clunky international transfers frustrate many SMEs. Revolut makes it easy to make payments and trade internationally. Can you say the same of your business account provider?

Transactional speed again helps to build trust. Whereas slow execution by the traditional banks combined with a lack of transparency breeds mistrust.

One last example … be immediate

“Open your account in a flash”. This does exactly what it says on the tin. We don’t need to say any more here.

To sum up …

The success of banks like Revolut is regional. The klaxon for traditional banks in places like Ireland is louder right now than for banks in the UK say, which have a much tighter grip on the market. This won’t hold. Customers – personal and business – will seek out the provider that they trust to meet their individual needs. The levers that a bank like Revolut is pulling to build trust are the same levers that keep customers loyal and improves customer retention.