Three steps to delighting banking customers with fees (really)

Do you tailor fees to customers?

New entrants to financial services entice customers with too-good-to-be-true promotions and keep them with seamless digital experiences. How can traditional banks compete? Upstarts can’t match traditional banks’ breadth of services or potential for data-driven insight. Proactive personalization of the banking experience operationalizes those advantages.  

Working with banks on initiatives to boost revenue and customer loyalty has revealed promise in a surprising area of customer engagement: Fees and charging. Banks can supercharge personalization by modernizing the way people experience fees and charging. You empower customers to choose fee options and product bundles that reflect their needs.  

Here’s how it works: One customer might opt for a bundle that helps to lower their mortgage rate. Others can choose to use their credit card for more types of payments to boost their savings rate. The result? You deliver a banking experience that gives customers a greater sense that you’re partnering with them to achieve their financial goals. Personalized fees strengthen your position as a trusted advisor with insight into a range of tools to further financial goals.  

Obstacles to fee personalization  

Legacy core banking systems are one of the most intractable barriers to modernizing the banking experience for customers. Each siloed system drives a line of business. To connect systems, you must hardcode every change. Creating fee-based incentives and product bundles takes months. So, you end up with limited options aimed at a few customer segments, such as one-size-fits-call perks connected to maintaining minimum balances.  

While core system modernization is a laudable goal, you don’t need to shift away from legacy technology to enable fee personalization based on cross-line-of-business customer data. Instead, you can use core-agnostic fee, charging, and product technology that bypasses legacy systems. Product managers turn to no-code tools to configure product bundles and fee parameters. They can quickly turn a few products into an array of bundles that customers can personalize based on their preferences. Built-in guardrails keep bundles compliant with regulations. 

Put fees at the center of banking modernization  

With the right tools in place (and many banks already have some no-code or low-code personalization options on the product management side), you need a plan to take advantage of bundles and fee-based incentives. To connect customers to the right set of products with fees tailored to their priorities at the right time, follow these steps:  

• Start with transparency: You can’t personalize what’s hidden. That means you need to be transparent about costs when you engage with customers about products. Pricing for financial products can be complex, but you should look for straightforward and compliant ways to explain the fee-based advantages of bundles.
• Create flexible bundles: Empower product managers to configure bundles with flexibility. The idea is to treat customers as a segment of one. That’s a scenario where people are presented with several configurable bundles based on their prior financial habits.
• Use incentives to deepen customer relationships: Bundles are an ideal way to cross-sell and upsell, but the fee personalization aspect increases customers’ sense of financial agency. That’s because customers play a role in selecting the fees and incentives that match their lifestyle. So, one customer might opt for a bundle that helps them repay an auto loan faster, and another might elect to save on insurance or boost the interest rate retirement savings.  

Save more when you spend more

You can experiment with fee personalization with bundles that include as few as two financial products. Focus on a business goal or product, such as credit cards. For instance, if you issue cards, you want customers to choose yours when it’s time to pay for goods and services. Yet, that’s challenging when a typical customer in the United States has 3.9 active credit cards, on average. In the EU, that number varies by country, with Luxembourg having the highest rate at 3.9.  

A bank we work with focused on that business problem by exploring incentivizing customers to use its credit card. They identified savings accounts as the product to bundle with credit cards, and then used no-code tools to design customer incentives. The bank tied savings deposit rates to card purchases. Customers who use the bank’s credit card more often enjoy a higher savings rate, which is adjusted quarterly. The program boosts card usage and gives customers a sense of control over their savings rate.  

Start modernizing fees today

At Amdocs, we help fuel breakthrough growth by ending the divide between your business goals and legacy technology. You reinvent everyday banking by modernizing the customer experience by extending personalization from offers and products to fees, branches, and beyond. Talk to our banking specialists today to learn more.