“The half-life of relevance has never been shorter, and it’s no wonder: Technology advancements, cultural shifts, pandemics, and global conflicts are reshaping the world at record pace. And the resulting change isn’t just happening faster — it’s happening in a more profound way.” 

— David Droga and Baiju Shah, CEO and CSO at Accenture Song 

The digital banking revolution has transformed the relationship between banks and their customers. 

Customers now have a range of service providers at their fingertips — quite literally. And as FinTechs, neobanks and big tech players continue to expand their offerings, customers are more willing than ever to combine services from multiple providers to secure the most innovative service. 

As this “unbundling” of services becomes standard, FSIs need to work harder to deepen their relationships and extend their share of wallet. In this post, we’ll look at how you can become the provider of choice for your customers’ banking needs. 

The digital banking landscape in 2024

Before we explore the key strategies for extending your share of wallet, let’s take a closer look at the state of play so far in 2024. By examining the key trends transforming the financial services landscape, you’ll get a better sense of what you’re up against: 

The rise of the digital natives

Digital native banks — also called neobanks or challenger banks — are an increasingly popular option. 

In the US, digital banks now make up 20 percent of all primary financial relationships (PFRs), up from 10 percent in 2019. And of those who have chosen neobanks for their PFR, 37 percent are aged 18 to 34. This should be a key focus for FSIs looking to secure the loyalty of younger customers. 

The decline of loyalty

According to one pre-pandemic survey, customers were more likely to get divorced than to switch banks. But recent research suggests a major shift has taken place over the past five years. Research by McKinsey found that 15 percent of customers are open to a new banking relationship this year, and 20 percent are considering switching banks. 

Fragmentation of services

In the era of physical payments, the idea of having multiple wallets would have been a little strange. But in a digital era, it’s entirely normal. In fact, 30 percent of customers are planning to use three or more digital wallets in the years to come. And if we look beyond payment services, we can see similar trends: 64 percent of US households now have two or more savings and investment relationships. 

These trends share a common theme: as digital adoption grows, the digital banking landscape becomes more fractured. Customers become more willing to use services from multiple different providers — and to switch as soon as they aren’t satisfied. 

But these trends also reveal a significant opportunity. As a result of this “unbundling” of financial services, most FSIs are now only holding 10 to 20 percent of a customer's wallet — and there are major benefits to pursuing some of that outstanding share. The same study projects that FSIs could see a return of 70 percent or more by targeting existing customers. 

The question is: how? 

How to increase share of wallet in the second half of 2024

1. Understand your customers’ needs 

If your customers are looking for services you aren’t providing, they’ll be forced to turn to alternatives. But simply offering a broader range of digital services isn’t enough. 

Increasing your share of wallet begins with understanding what your customers are actually looking for. While your Gen Z customers may be open to financial advice from AI-driven chatbots, this may not appeal to other age groups. Ultimately, rolling out innovative digital products that have no demand won’t deliver the ROI you need. 

To build a better picture of your customers’ specific needs, you can: 

• Conduct customer surveys to identify their pain points 
• Engage with your customer service teams to highlight common issues 
• Examine trends around account closures to draw out customer motivations 

2. Extend your personalization efforts 

Customers increasingly value personalized services, with three-quarters describing them as “highly important”. But personalization doesn’t just improve customer satisfaction — it also helps you offer relevant services at the appropriate time. 

For example, if a customer has been exploring mortgage deals on your website, an email showcasing relevant deals could keep them from looking elsewhere. Or you can use behavioral data — right down to item-level receipt data — to deliver personalized card-based reward programs. 

With this approach, you can intervene early in a customer’s purchase journey. By bringing your offerings to their attention right as they begin their research process, you’ll have a better chance of being their first choice.

3. Leverage your data 

Understanding your customers’ needs and personalizing your services both rely on a solid foundation of data. 

But if your customer data is distributed across multiple systems, you’ll struggle to build a holistic picture. To create this picture, you’ll need to integrate your data onto a single, centralized platform. You might consider adopting a CRM system like Salesforce, which can enable integrated customer profiles. 

With a steady flow of data through your organization, you can also trigger automated workflows based on customer interactions. If a customer starts to explore a new product, you can automatically send information to the relevant teams and activate follow-ups — an email that prompts them with the next steps, for example. Or, if they’ve already begun an application, you can keep them informed of its progress at every stage. This will make them less likely to drop out of the process before completion. 

As a result, customers will benefit from a proactive experience that doesn’t wait for them to seek out new products or services. Instead, it meets them where they are with the advice and support they need. 

4. Integrate your payment options 

89 percent of customers now use digital payment options. But while most customers say they prefer to use their banks for digital wallet services, they are far likelier to use Apple Pay, PayPal, or Google Pay than any other providers. 

To tackle this, ensure you’re offering convenient and user-friendly digital payment options. At the same ensure you’re making best use of your existing relationships. That means ensuring your payment services are fully integrated with your other offerings to extend the benefits for your customers. 

For instance, if you offer a buy now, pay later (BNPL) option that’s directly integrated into your current credit options, customers will be far less likely to use another service provider. And if you’re also offering personalized credit options based on the data you already hold, you’ll be able to make an even stronger pitch. 

Build your digital capabilities with Modes 

Your customers have quick, easy access to a wide range of service providers — and they’re more willing than ever to explore their options. 

In this environment, offering user-friendly, fully integrated digital services is vital. A unified approach can help you build deeper relationships and increase share of wallet over the coming years. 

But making this kind of service possible is a major task. It requires careful planning and consistent effort — and the right partner to help you stay on track. 

Modes are experts in helping FSIs navigate their digital enablement journeys, and it's our job to help you succeed in a rapidly changing landscape. Connect with us today to find out how we can help you design and implement digital services that will make you the first choice for your customers.