Customer churn in banking and fintech: how to reduce it

Customer churn is a real concern. If you’re seeing high churn across your banking customer lifecycle, there is likely an underlying issue with your product, your customer experience or both.

The question of how to avoid customer churn is complex. While some churn is to be expected, the challenge is understanding why customers churn and then keeping your churn at an acceptable level for your business.

We explore the topic of customer churn in banking and share a range of strategies you can implement to build brand loyalty and minimise churn.

Optimism in the fintech landscape

In 2021, there was a collective investment of $3.6 billion into the fintech industry. It’s a colossal market with both traditional banking players embedding fintech into their plans and new startup players emerging. In Australia alone, the number of fintech businesses has doubled in the four years to 2021.

With a number of forces at play — such as increased transparency from open banking and the increase in buy-now-pay-later services — there is optimism in the sector.

But it’s also not an industry without its challenges. One of the benefits of a high retention rate is that it’s cheaper to keep an existing customer than to find a new one. Customer churn in banking and fintech is no different. Fintech customer acquisition costs can be particularly high, which raises the stakes when it comes to customer churn.

With so many players in the market, customer experience in fintech can be one of the biggest differentiators.

How to reduce customer churn

The stakes are high, but what practical actions can you take to minimise bank churning across your customer base?‍

1. Understand the cause of the churn

Retention strategies need to be informed by data and modelling of the actual cause of churn. An overhaul of pricing won’t impact retention if customers are leaving because of concerns with the product.

2. Review your onboarding process

How are you engaging with your customers through the sales and onboarding process? Is it a seamless customer experience? Or are there gaps in the process that could be improved with a customer engagement system?

3. Look at your data

The beauty of fintech is that you have the data at your fingertips to create meaningful and sustainable data-driven retention strategies. Consider patterns in your data related to demographics and app behaviour to identify customers most likely to churn.

4. Increase customer loyalty

Loyal customers can not only lower churn rates, but they can also help to reduce customer acquisition costs through ongoing referrals, incentivised or otherwise. By fostering loyalty with customers, you can build stronger relationships and facilitate repeat purchases.

Reduce churn with Pendula

In many cases, customer churn in banking, fintech or other industries is higher when there is friction in the customer experience and engagement process. This can leave a bad taste in their mouth and result in escalating churn rates.

The answer? A customer engagement platform that automates customer conversations.

Pendula’s no-code platform allows you to take a more proactive approach to your customer engagement with two-way personalised messaging powered by AI learning. Customers feel more connected to your brand and you can free up internal resources to focus where you need them most.

Step up your customer engagement

If you’re ready to transform your customer experience with Pendula, contact us to talk to an expert.