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5 Reasons You’re Losing Customers to other Banks

Want more customers? Of course, you do. But sometimes, your ideal prospects flock to a competitor. Here are five reasons why.

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Temenos – Company

Attracting that ideal customer—one who aligns with your offerings and values—is a top priority for every bank. Yet, even when a customer shows genuine interest, a lasting business relationship often fails to materialize.

Target customers may have explored your services, downloaded your app, opened an account and may have even conducted several transactions with you in the past. But in the end, they committed to another bank, lender or fintech.

This scenario is common in today’s hyper-competitive financial services world, affecting incumbent banks, credit unions, other lenders and even spry digital startups.

A bank risks onboarding fewer customers and losing long-term loyalty if its business model is product-centric by design. Today, successful banks innovate and grow best from a customer-centric point of view.

Attracting new customers in today’s crowded financial landscape requires more than just innovation—it demands banking experiences that are seamless, personalized, and delightful to use.

Many financial institutions acknowledge this shift but continue to struggle. The issue? They focus on products rather than addressing their customers’ unique needs and delivering tailored solutions that create strategy-specific impacts, ultimately strengthening their customers’ financial positions.

Here are five reasons banks, credit unions, lenders, fintechs, microfinance entities, and others fail to stand out:

1. They offer fragmented digital experiences

Customers expect seamless, intuitive banking, but outdated infrastructure creates disjointed interactions, requiring redundant data entry and inconsistent service across channels. This friction leads to frustration and drop-offs due to a diminished trust in the bank’s ability to serve its customers.

2. They launch products too slowly, losing market share

Slow development cycles caused by legacy systems and integration challenges prevent banks from quickly delivering new features and services. Meanwhile, agile fintechs and digital-native banks capture demand with faster, customer-driven innovation—offering instant access to the solutions people want.

3. They forgo going fully modular, limiting agility

By not adopting a fully modular core, banks struggle to adapt quickly to changing customer expectations and market demands. This rigidity slows innovation, making it easier for more agile competitors to attract and retain new customers.

4. They fail to personalize experiences at scale

Siloed data and outdated platforms prevent banks from delivering hyper-personalized experiences, especially in areas like wealth management and financial guidance. Without real-time insights and proactive recommendations, customers will seek more tailored solutions elsewhere.

5. They underestimate security, compliance, and data transparency

No matter how innovative a financial institution is, if customers don’t trust its security, they won’t stay. Legacy systems struggle to keep pace with evolving cybersecurity threats, regulatory demands, and customer expectations for control over their personal data—creating gaps that competitors exploit.

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Your future customers are waiting.

While 74% of banking customers want more personalized services, only 22% feel their banks anticipate their needs.[1] A strong core and solutions provider is key. The right provider listens to financial institutions and builds a tailored strategy—just as banks do for their customers.

When choosing a core and solutions provider, ensure they enable you to do the following:

1. Slash your onboarding times significantly

Even as high as 50% or even higher.[2] No one today wants to spend time onboarding. It makes them feel the financial institution isn’t interested in their business.

2. Boost your Net Promoter Score (NPS)

A good provider should complement broader efforts to boost NPS—a gauge of customer loyalty—by around 30%. [3]Nothing makes a bank more attractive than good word of mouth from loyal customers.

3. Invest in research and development

Finding a core and solutions provider that invests consistently in research and development is key. A top one will funnel 20% of its revenue into R&D annually, ensuring continuous innovation and robust solutions for financial institutions.

4. Make your onboarding seamless

Leading banks should aim for at least 90% of new customers onboarding digitally.[4] Customer churn rates should hover below 1% for retail banks ideally.[5] Business banks should aim for a 65% reduction in digital onboarding times.

5. Process better

Shoot to boost your front-office Straight-Through Processing (STP). This metric shows how efficiently a financial institution processes transactions with less manual input. It’s especially key for institutional clients like corporate banks or asset managers. Fewer errors mean fewer reconciliation costs and delays while payments go through quicker, as do trading and other activities

First impressions matter, but they vary by banking sector. Retail banks should excel at providing seamless and convenient digital experiences for consumers, while credit unions focus on personalized, community-centered services. Commercial banks need to deliver tailored financial solutions for businesses with a focus on growth and efficiency.

A good core and solutions provider should have a proven track record helping all of them.

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Blog,
Temenos – Company