Banks can enhance customer loyalty and promote financial wellness by capitalizing on subscriptions:
Understanding and leveraging subscription payments is vital to marketing for financial institutions [FIs], helping to secure top-of-wallet status and foster loyalty.
To capitalize on this, FIs can employ several strategies to benefit both the institution and its account holders:
– Valuation and Rewards: Start by identifying account holders’ subscriptions and recurring charges through transaction data and place a dollar value on those payments. Once you understand the dollar value of subscriptions, develop and offer rewards to consumers to encourage card use for subscriptions and recurring charges. This not only secures continuous interchange fee revenue but also enhances card loyalty and usage.
– Seamless Subscription Management: Proactively assist consumers in updating their subscription payments onto new cards, ensuring uninterrupted service and safeguarding your revenue stream. This approach not only provides convenience to the customer or member but also reinforces their trust in your services because you are helping them avoid potential late payments or service disruptions.
– Promoting Financial Wellness: Use your insights into consumer subscriptions as a tool for advocating financial health. By highlighting unnecessary or forgotten subscriptions, you can guide account holders towards smarter financial decisions, potentially saving them money and enhancing their trust in your financial guidance. Forty-two percent of Americans have forgotten about a recurring subscription and, as a result, kept paying for one they weren’t using.
– The Importance of Clean Data: The foundation of these strategies lies in the effective management of data. The key is to cleanse, normalize, and categorize the transaction data associated with each consumer and identify those that are subscriptions. Data tells a story about everyone, including, but not limited to, which subscription services they use. Not every financial institution has developed a data-centric approach, and without it, customer insights, such as subscription payments, can be difficult to ascertain. Transaction data cleansing is a critical tool that allows financial institutions to better understand behaviors and model spend patterns through account holder transaction analysis. (Hall, 2024, paras. 9-14)
Pondering the question of how banks can incentivize customers to improve their personal finance and wellbeing, I found this article to be very relevant as it applies subscription service strategies to enhance customer engagement.
Instead of straying away from subscriptions, offering rewards for using specific payment methods would allow banks to capitalize on top of them. It would give customers a reason to look over their subscriptions and manage their finances more.
If banks were to compile and put a value on customer subscriptions, it would help people become more aware of their recurring expenses, possibly leading them to cut out redundant costs. This would contribute to an overall better understanding of their personal finance, as well as free up some income for savings or more meaningful experiences.
If a bank did create a system to monitor subscriptions, how much data could they gather and incorporate into the interface? Is it as simple as here’s the subscription name and price, or could it break down specific usage and categorize their impact on the consumer?
References
Hall, J. (2024, March 20). Marketing for Financial Institutions: Navigating the Subscription Economy for Enhanced Growth and Engagement. Alkami. https://www.alkami.com/blog/strategies/marketing-for-financial-institutions-navigating-the-subscription-economy-for-enhanced-growth-and-engagement/
