Whats loyalty got to do with banking?

Hi, this is my first post, only time will tell how many more there will be, any advice will be gratefully received!

My first thought is that the theory of customer loyalty is quite straightforward; a business that retains its customers for longer usually makes more money from them at lower cost than one that is constantly paying to acquire new customers.

However actually doing this, creating loyal customers, is not so straightforward.

In a recent survey, only 16% of customers said they felt a sense of loyalty to their bank (Thunderhead 2009). Considering the importance of bank products in supporting all aspects of people’s lives this makes bleak reading. This figure has no doubt been influenced by recent events, a theory supported by the fact that 66% of people trust banks less than they did 5 years ago (ICM, Feb 2010), however it still indicates that customers do not feel engaged by their financial services organisation.

A lack of engagement is feeding a lack of loyalty, with the aforementioned Thunderhead poll suggesting that 63% of consumers would consider swapping their primary banking institution, indicating that the need to develop a stronger rapport with  customers is more important than ever.

I’ve worked for a global bank and know how closely levels of switching and engagement are tracked, so its not a problem banks are unaware of… I’m not saying don’t focus on revenue, that would be crazy, but it would be great to see banks starting with the customer in mind, not just the bottom line.