Can banks assume their customers are loyal just because they aren’t exiting in droves? Don’t count on it. According to new research from Celent, 73% of banking customers are moderately satisfied or less, while 25% have recently considered switching to a new primary institution.
Customers who make up this “switchable middle” may not actively be shopping around for other banks, but they are dangerously easy to take for granted. Dated products and lackluster experiences can make modern offerings from competitors more tempting.
To win and retain customers, leading banks can no longer compete with rates, fees, and terms alone. Their success now relies on how well they can turn routine banking into personalized experiences worth keeping.
The silent majority is too easily ignored
Customers rarely leave their bank because of one failure. More often, loyalty erodes when banking repeatedly feels inconvenient, impersonal, or unsafe. Those daily frustrations create an expectation gap between the experience customers receive and the recognition, guidance, value, and protection they expect.
Data from the Celent report illustrates how widespread that gap has become. For example, 53% of customers are dissatisfied with payment services, 39% are dissatisfied with fraud protection, and one-third or more are dissatisfied with value-based offerings such as customized rewards, fees, and benefits.
These findings point to different needs, from confidence in everyday transactions to value that reflects the customer’s relationship with the bank. Personalization cannot substitute for reliable services or effective protection. But it can help banks move beyond a standard response to offer support that reflects what the customer is trying to achieve. Customers may keep their accounts open, but when another provider offers a more relevant, secure, and personalized experience, their reasons for staying begin to disappear.
A critical solution: personalize the digital experience
Most banks know that the front end matters. More than half ranked digital channels among their top three technology investment areas, and more than 80% expected their expenditures in this area to increase further, according to the Celent report. That’s a wise move, because customers see plenty of room for improvement: only 14% felt their banks were doing “extremely well” at personalizing products and services, and 34% said “very well.” That leaves 52% who rated their banks moderately well or worse. What’s more, 40% would switch for better online and mobile features, one of the leading reasons to choose a new primary provider.
But when nearly every bank is investing in digital, keeping up won’t set anyone apart. The winners will be the banks that turn channels into personalization engines, using data, AI, and customer engagement to adapt each experience to the customer’s goals, behavior, and financial context. And the window to lead is closing as more competitors turn personalization from a goal into a working capability.
AI can help banks close the expectation gap by turning customer data and digital engagement into products and services that reflect each customer’s needs and relationship. It can identify changing behavior, anticipate needs, and deliver useful guidance, offers, and rewards in the moments that matter. But the value comes when that insight leads to an appropriate action and a connected experience.
Take a customer who wants to save more each month but is unsure how much they can put aside. Rather than only explaining how to set up a regular transfer, the bank could, with permission, use account information and upcoming payments to help them explore what different savings amounts would mean for their balance.
Customers could then choose an amount and set up the transfer in the app. If they need to speak to someone, they should not have to explain everything again: the context of the conversation should be available to the bank employee. Customers should also be able to return to the app to review or change the transfer.
This is where personalization becomes more than a tailored message or recommendation. It helps the customer work through a financial question and act on it, with support that stays connected whether they use the app or speak to the bank.
And research shows customers want their banks to deliver in this area. According to Celent, 68% of customers would use a conversational interface for open-ended banking questions.
Close the expectation gap
Closing the expectation gap goes beyond improving individual channels. Four of the top six reasons customers would switch primary providers are tied to value and trust, which illustrates how closely experience and loyalty are connected.
Banks must connect digital experiences, AI capabilities, customer data, and product flexibility to build trust and deliver guidance, recognition, and meaningful value. Banks that build loyalty recognize customers’ needs and goals today, then adapt experiences as their journeys evolve. They’ll capture the switchable middle and earn a greater share of each customer’s financial life.
See what customers expect.
In The Banking Expectation Gap, Celent compares what customers want with where banks are spending. Inside, you’ll find:
- How satisfaction, switching risks, and personalization gaps vary by region, age, and channel use
- Why 56% of retail banks say winning and keeping customers has gotten harder in the past year
- Where bank technology priorities fall short of customer demand, from fraud protection to personalized experiences
- Why outdated core systems could widen the gap, and what banks can do about it
