While in the past banks focused on rewarding customers for using a particular product, such as a credit card, today we are seeing growing interest to move in the direction of enterprise customer loyalty. Banks have realised that this will help them to further strengthen  relationships by rewarding customers for the products and services they use including credit cards, current and savings accounts, and insurance. This is driven by a recognition that the more links a customer has with their bank and the greater number of products, the greater the chance they will not defect to a rival institution.

A McKinsey research report, completed before the credit crunch crisis of 2009, showed that loyal customers generate between 30% and 70% more value to banks than run-of-the-mill clients over the lifetime of their relationship with the banking institution. The same research showed that loyal bank customers buy more products from the bank even if they have to tolerate higher bank charges and will continue with the same bank as long as the bank treats them well and provides good value over the long term.

But despite this growing emphasis on customer retention, most departments within the banks still function independently. While cross-selling of products requires the cooperation of different departments, each product often comes with its individual rewards programme which could be confusing for the customers. For example, a bank customer using their credit card may receive points per transaction while the same customer might be rewarded by other means when purchasing an insurance plan from the same bank.

A bank-wide loyalty programme can minimise overlap and confusion by consolidating and accumulating all reward units into a single system for all the products and services that a customer uses across the bank. This consolidated system will also offer customers a simpler and more convenient participation and redemption process. The programme can be further set up to allow bank customers to conveniently check their loyalty status and print rewards or offers at any channel of their convenience, be it at the nearest ATM or via their internet or mobile banking.

Running a bank-wide loyalty program can help financial institutions move towards a more "holistic relationship" with their customers and to better understand their needs. Furthermore, such a system can help banks increase their customer spending and transaction volume by delivering personalised offers. For example, if the customer uses an array of services, the bank may want to consider offering a higher point multiplier to increase loyalty. Or if the customer wants to exchange points for some travel-related rewards, the bank could cater to their specific needs.

A consolidated bank-wide loyalty programme also enables and encourages more interaction with other departments to share costs and maximise customer impact. For example, the insurance department could run a joint promotion with other departments and operate a shared loyalty system to reward the customer when they make regular payments into their savings account.

Importantly, a consolidated system reduces the cost of fulfilling the rewards program and provides a single point of reference when analysing customers' behaviour in savings and purchasing patterns. Having a real-time, single view of a customer's transactions and engagement with the bank is particularly important as it allows customers that are ‘silently' disengaging themselves from the bank to be quickly identified.

A bank-wide loyalty strategy can give banks the competitive edge they need in the increasingly challenging environment of customer loyalty today.

Sebastien Slim is vice president, product marketing and global pre-sales at Welcome Real-time