How Can Banks & Wealth Management Firms Prevent Client Churn
By Poorna Nayak | Mar 03, 2021
There is a great loss in losing even one HNI client! A lot of banks and wealth management firms focus a majority of their attention on new client acquisition, but it is equally important to retain existing clients. Studies have shown that banks can increase their profits by up to 85% just by improving their retention rates by 5%.
So how do we define churn? It's not like unhappy clients will switch overnight. It starts with a certain level of client disengagement. The process is gradual and unhappy clients will slowly start moving their assets elsewhere. This happens over a period of time, and by the time banks and WM firms realize, it is already too late.
The Leading Cause Of Churn - Dissatisfaction
Clients switch for a number of reasons. Some part of client attrition can be attributed to major life events - leaving a job, having a child, getting married, divorcing, buying a house, retiring, etc. But, another major reason for churn is "dissatisfaction".
Annual Banking Client Churn, By Cause
The 7 main reasons for dissatisfaction are - poor service, high fees, poor return rates, lack of breadth in product offerings, inconvenience, quality of digital tools, and personal attention.
Though there are varied reasons for client churn, the real problem lies in the fact that banks do not have access to early feedback data. Early churn prediction can empower banks to take proactive measures and engage with their clients in a way that the churn can be prevented. 11% of churn can be avoided by simply reaching out to clients early enough.
A CX Strategy To Reduce Client Churn
The wealth management and banking landscape has become highly competitive. It is not only the banks that are trying to get the attention of clients across all wealth levels, be it the mass affluent segment or Ultra High Net Worth Individuals (UHNI) segment. There are a lot of new-age digitally-led players now than before. It is not hard to imagine tech companies like Google managing money. And what these companies are good at is "great user experience".
Clients' needs are rapidly changing. Digitalization is only empowering clients and making it easier to switch now than before. Only enhanced customer experience across all touchpoints can differentiate a successful bank from its competitors. Firms that successfully engage their clients will also be able to increase client lifecycle, thus accessing a greater share of their wallets.
Winning new clients is hard, keeping them is harder.
Superior Client Experience With Personalization
Over 53% of clients place "high value" on this aspect of wealth management - personal attention. When it comes to wealth management, it is all about personal relationships, and banks and WM firms are usually worried about losing the personal touch while going digital. That's where personalized videos come in.
% of Clients Ranking "Personal Attention" Of Wealth Management Relationship By Value
Ref: E&Y
Wealth managers have various channels to communicate with clients - telephone, video calls, online chat, or email. Video calls can get tiresome and emails impersonal. Personalized, interactive videos occupy the sweet spot of being engaging and also not being too demanding of a client's time. HNI clients are usually busy and so are their RMs. It usually happens that the RMs end up spending most of their time on the top 20% of their clients. Personalized, interactive videos are a way to reach out to all clients, at the same time retaining what's most important - the personal touch! Personalized, interactive videos can make digital engagement feel more human.
One cannot overstate the importance of regular client communication. Frequent communication is the best way to know if any client is unhappy. Portfolio video statements can help a bank proactively reach out to all clients as well as collect regular feedback from within the videos themselves. Clients are more likely to give feedback if it is combined with important communication like a monthly portfolio video. If feedback is sought directly by an email survey the response rates are very poor.
Personalized, interactive videos can provide a window into the clients' minds so that RMs can take proactive measures to keep clients happy. Happy clients stay loyal resulting in reduced churn.
Collect Regular Feedback With Personalized, Interactive Videos
Enrich Platform equips customer-facing teams with cutting-edge technology tools, innovative content formats, and analytical insights to effectively engage customers and prospects and grow their business.
To understand how Enrich Platform can work for your bank or wealth management firm do get in touch with us.