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Emotions, Engagement and Data: New Ways to Make Day-To-Day Retail Banking Pay

Published by Gbaf News

Posted on November 20, 2014

5 min read

Last updated: January 22, 2026

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Christopher Evans, Director, Collinson Group, discusses the hidden value in banks’ retail customer base

It is becoming harder and harder to make ‘basic retail banking’ pay. Restrictions on the cross-sale of premium products have closed routes to incremental sales. Meanwhile, moves by the European Parliament to limit card interchange fees will mean lower run-rate revenues from day-to-day retail banking activities.

It is too soon, however, to talk of the inexorable decline of retail banking as a business line. What the banks can boast, which few other financial services providers can, is a large and generally static customer base, which comes into contact with its brand on a daily basis. There are more and more ways that banks can use this frequency of contact to shape and influence customer behaviour in ways that generate new revenue streams. In other words, banks need to view their retail customer base as their primary asset from which significant value can be derived, through the introduction of highly targeted engagement initiatives.

Loyalty programmes are viewed by consumers as a means to access benefits and derive value from brands:., Many of these programmes can also act as a powerful source of ancillary revenue for the brands that operate them, evident specifically in the airline industry where loyalty programmes comprise the most significant contributor to overall ancillary revenue., Retailers and mobile phone operators have also used loyalty marketing and programmes both as a CRM mechanism and a profit centre, and this is on the increase – providing offers and benefits to customers on one side, and valuable consumer insights for the business on the other.

Is this an opportunity which the retail banks are missing out on? Research commissioned by global loyalty marketing and CRM specialist ICLP and industry analyst Forrester[1], identified that out of all the different loyalty programmes available, 68 percent of consumers said they would value a banking loyalty programme the most. However, only 15 percent of this group are actually members of programmes operated by their bank. That the gap between consumer need and bank action is so wide is clear evidence of untapped potential and strong opportunity for the banking industry.

The presence of a reward programme will however not generate deep customer relationships on its own. Programmes help drive ‘transactional’ customer contact, but, emotional loyalty, which is what brands should strive for, takes more than rewards – it requires customer engagement. What’s more, this deeper level of engagement can generate the richer insights which drive real business value.

The need to get emotional

To make loyalty truly work, financial services providers and other B2C businesses need to re-design structures to focus on ‘emotional loyalty’. Emotional loyalty requires a robust understanding of what customers want and how they interact with the brand, and then responding to these needs in a personalised and relevant manner. This, we believe, is a far more effective way of using incentives and rewards to inspire customer loyalty than to appeal to only the commercial benefit of belonging to a loyalty programme.

So how does a bank create and build emotional loyalty in practice? The key is to understand the brand’s ‘value exchange’ for its customers. This should comprise many aspects, such as:

Rewards – going beyond cashback to offer more innovative incentives, such as experiences that can be shared
Recognition – customers want to know they are being treated differently to other customers. This can be demonstrated through tiered benefits, special access and status within loyalty programmes
Communication – customers want to get updates and news that is valuable to them and through channels they prefer or select
Operations – making the customer journey easy and as seamless as possible will encourage customers to return and make future purchases
Interactivity – loyalty is a two way street between the brand and customer. Brands should invite customer to give feedback – and then they should act on it. Mobile apps and games offer further opportunities to deepen customer engagement.

There are also many technologies on the market that can drive high levels of engagement and deepen the relationship. For example, platforms that can integrate with banks, card issuers and retailers to provide special offers, points redemption and other real-time communications to consumers at the point of sale can help with this. Insight into purchasing, earn and redemption behaviour is a huge, untapped market opportunity for retailers and banks and these platforms are a way to build closer ties with consumers and drive incremental revenue.

The value of loyalty data

The other area where loyalty programmes can have a big impact on overall customer engagement is in the data they collect. Unlike many flavours of ‘big data’, which can lie across several systems and be subject to myriad governance regimes, the data generated by loyalty programmes can be self-contained and so simpler to mine. But simplicity does not belittle the richness of the insights ‘loyalty’ behaviour contains. When it comes to understanding trends in consumption and redemption, it can rival other data sources.

Loyalty is about recognising your customers, not just rewarding them. Harnessing the data generated by loyalty programmes is one critical ingredient. Understanding the pathways to emotional loyalty is another. As banks look for new ways to make day-to-day retail banking pay, the revenue opportunities derived from influencing customer behaviour could provide many of the answers.

[1] Forrester online survey on behalf of ICLP Plc, August 2012