In the early days of banking, personal relationships were the cornerstone of financial services.
Local bankers knew their customers by name, understood their financial situations intimately, and offered tailored advice based on that knowledge. This personalized approach fostered deep trust between institutions and their customers, creating loyalty and lasting relationships.
Fast forward to today, and the landscape has drastically changed. As technology advanced and financial services expanded, we inadvertently created a more impersonal experience. The drive for scale and efficiency has left many customers feeling like just another account number.
Why does all this matter? Because the cost to acquire new clients is significantly higher than the cost to retain and expand relationships with existing ones.
But modern financial institutions are struggling to bring existing customers into deeper engagement with their array of products and services — and our history holds a few clues as to why.
This transformation presents a critical challenge for today’s financial institutions: how to rekindle those deep, trusting relationships with customers in a modern, digital-first world. It’s no longer enough to simply offer a wide array of products and services. Customers have grown weary of generic marketing pitches and impersonal upsells, often feeling bombarded by offers that seem disconnected from their actual needs and goals.
The Challenge: Rebuilding Relationships in a Digital Age
The shift from community-based banking to nationwide and even global institutions has brought undeniable benefits in terms of convenience and product diversity. However, it’s also led to a significant erosion of the personal touch that once defined the industry and allowed institutions to offer customers distinct value across a range of products.
Today, many customers view their financial institutions as interchangeable service providers rather than trusted partners in their financial journey.
In many cases, FIs look to bring existing customers further into the fold by 1) offering a wider array of products and services and 2) selling their offerings more aggressively.
The problem? Customers have grown weary of generic marketing pitches and impersonal upsells. If they’re going to buy a new product, they need a reason that goes beyond we’d really like you to.
To elaborate, here are a few specific reasons why the “create more products and sell harder” playbook doesn’t achieve the hoped-for results in financial services:
1. Siloed Experiences
In modern financial organizational structures, each of the many product lines operates independently. From the savings unit to the credit card unit to the investment or mortgage unit, institutions have grown their structures and technologies around these product silos, focusing less on a comprehensive approach to customers and more on product-specific relationships.
The modern financial experience focuses less on customers as individuals with interconnected financial needs and more on their disparate interactions across different products. This creates a fragmented experience in which customers no longer see FIs as the trusted, wholistic institutions their grandparents once did.
2. Lack of Customer Understanding
Though financial institutions have access to vast amounts of customer data, most aren’t leveraging it to gain insights into individual customer circumstances, life stages, or financial goals.
Without insights into specific customer needs, institutions struggle to offer relevant solutions at the right time, leading to missed opportunities for meaningful engagement and delivery of real value.
3. Push vs. Pull Approach
Modern customers are quite comfortable spreading their financial lives across multiple institutions, cherry-picking the best deals without loyalty to any single provider. They’ve developed their own logic about financial health, even if it’s sometimes based on misperceptions (like thinking it’s safer to spread money across multiple banks).
Impersonal sales tactics are incapable of addressing the situation. Even if you win a few customers with a great offer, they’ll continue to shop around for their other needs — and for a better offer on the same product down the line.
Loyalty stems from trust and genuine attempts to add value. Think about all those generic credit card offers that flood your mailbox or the constant upgrade prompts when you log into your banking app. These tactics may drive short-term conversions, but they erode trust and make customers feel like just another sales target.
Without a clear value proposition from a single institution, there’s little incentive for customers to consolidate their financial lives.
A New Approach: Value-Driven Engagement
To thrive in our current reality, financial institutions need a fundamental shift in their approach. Here’s how:
1. Refocus on Your Core Value Proposition
Start by clearly articulating what makes your institution unique. What specific value do you bring to your customers’ financial lives?
Identifying your overarching value proposition is crucial in helping you understand how customers perceive your brand and developing products that align with that perception. From an outside perspective, your value proposition will act as the connective tissue that binds all your various offerings into one cohesive brand.
Take Experian, for example. Most of us know Experian as a credit union. As such, we aren’t surprised when they develop a direct-to-consumer credit offering.
We’d expect the theme of the relationship to continue in that vein. If we need additional credit-related products, we might think of them first. We expect their insider knowledge of our debt and assets to drive valuable insights about related products and services.
If Experian suddenly offers us an auto insurance marketplace, however, we’ll likely be confused. What knowledge do they have about auto insurance? Why are they offering it? We’ll probably just stick with other institutions we know have expertise in this area.
Just because an FI has connected the dots on why they want to offer a product to customers doesn’t mean the customers can see it.
So, this isn’t to say Experian can’t offer auto insurance, but that they must clearly show customers how it connects to the company’s unique value proposition.
Ensure that your unique expertise shines through in every one of your products. Customers should be able to logically connect why you offer this service based on their understanding of your brand’s core competencies. If a new product feels out of left field, customers have no reason to trust you as an expert and authority.
Further, be sure to validate your value proposition through voice-of-customer and data around when and why customers are choosing your services. Then, lean into those strengths. This focused approach allows you to build a cohesive ecosystem where each offering reinforces your unique value.
2. Map the Customer Journey
Develop a deep understanding of your current customers, particularly your most valuable customer segments. What drives them to choose your institution? What are their pain points and aspirations?
One of the most important exercises you can engage in is to identify key moments or inflection points in customers’ financial lives where your services would provide the most significant impact. These “moments that matter,” as we call them, offer prime opportunities for meaningful engagement.
For instance, a customer’s first job, new marriage, recent home purchase, or retirement planning all comprise critical junctures where financial guidance is particularly valuable. By mapping these moments across different customer segments, you can create targeted strategies for each key transition.
3. Lead With Value, Not Sales
When you spot an opportunity to deepen a relationship, lead with clear communication of the value you provide. Instead of leading with the sale, lead with a message that demonstrates you understand their particular need at this point in their journey.
This approach demonstrates that you understand the customer’s situation and are genuinely safeguarding their financial well-being. It’s about shifting from a product-centric view to a customer-centric one, where your offerings are presented as solutions to real customer needs rather than just another thing to sell.
4. Unify the Experience
Break down those product silos. Customers should feel like they’re interacting with one cohesive institution, not a collection of departments that happen to share a brand name.
This might mean reorganizing teams, updating legacy systems, or reimagining customer interfaces. The goal is to create an experience where a customer’s entire financial picture is understood and accounted for, regardless of which product or service they engage with at the moment.
5. Test and Learn
Before rolling out new engagement strategies at scale, design and validate your approach through prototyping and testing. Feedback allows you to fine-tune your messaging and offerings based on real customer responses.
For example, if you’re considering a new way to present personalized offers within your mobile app, create a small-scale prototype and test it with a subset of users. Gather both quantitative data (like engagement rates) and qualitative feedback to refine your approach before a full-scale launch.
This iterative process helps mitigate risks and ensures that your new strategies truly resonate with customers before you invest significant resources.
Success Stories: Relationship-Driven Growth
Method has worked with financial clients like Jenius Bank to define and design key experiences across the customer journey. By collaborating with product teams on strategy and conceptual design, we’re able to assist with:
- Identifying customer needs
- Experience benchmarking and roadmapping
- Prototyping and iteration
- Concept design and testing
- Engineering and collaboration
Klarna, the Swedish FinTech company, has successfully increased customer engagement by aligning its offerings with customer needs rather than merely selling products. Their two-sided marketplace approach caters to both merchants and consumers, creating a dynamic ecosystem where both parties benefit.
The company emphasizes value-driven, personalized experiences, ensuring that each interaction is relevant and meaningful. By investing in a deep understanding of needs on both sides of transactions, Klarna has built rich, sticky relationships with its user base.
The Road Ahead
Rebuilding trust and deepening customer relationships in financial services won’t happen overnight. It requires a fundamental shift in mindset from How can we sell more products? to How can we deliver more value to our customers?
By focusing less on generic sales and more on delivering personalized value, you take steps toward recreating the trust and loyalty of the “community banker” era — but at a scale and level of convenience that meet modern expectations.
Financial institutions that master this approach will thrive in the coming decades. They’ll enjoy lower customer acquisition costs, higher lifetime customer value, and a defensible competitive advantage in a crowded marketplace.
Are you ready to reimagine your customer relationships?