Deepening customer loyalty is one of the most powerful ways for a financial brand to grow profits. Yet, it’s also one of the most underinvested strategies.
Regardless of industry or company maturity, many brands get stuck in a loop: marketing dollars and efforts go to acquiring customers—ads, sign-up incentives, affiliates, social media—while sustained engagement gets little focus. That neglect forfeits share of wallet and leads to churn. So the cycle repeats.
We’ve all heard, “It costs 5 times less to retain a good customer than to acquire a new one.” It sounds simple, maybe even tired. But Bain & Co. took it even further, backed by extensive modelling: in financial services, a 5% bump in retention can lift profits by up to 90%.
So, how can brands break the cycle? And can AI play a role?
The answer is two-fold. On the one hand, AI is rapidly transforming loyalty programs with hyper-personalized customer engagement, leveraging data and insights to curate offers that mean more to individual customers. On the other, the dwindling presence of a human touch presents a risk of alienating consumers. In fact, while 76% of people do want tailored experiences, 71% feel disconnected without real human interaction.
Before diving into the strategy, let’s understand what really drives customer loyalty.
The Most Important Loyalty Driver: Customer Experience
You might think that the rewards program is the biggest loyalty factor. But ahead of any points, cash-back or benefits offered, what consistently surfaces in research as even more powerful is the overall customer experience.
Today, most financial institutions lean on technology to improve experience. Many use chatbots and self-service tools for the vast majority of interactions. Bank of America, for example, published last year that 98% of customer questions to its chatbot are successfully handled without assistance from human staff.
Soon, every consumer brand will have AI at the center of its servicing strategy. But that’s no longer special—it’s expected.
What will set brands apart is how well they use AI to improve customer touchpoints rather than just replacing and automating human interactions. That means keeping the emotional customer connection alive, even as tech takes center stage.
American Express shows how it’s done. Known for industry-leading service and consistently garnering top customer experience awards, they doubled down on world-class human support over the past decade, even as digital tools took center stage. With key strategies such as Relationship Care and insourcing all servicing personnel, they continue to actively invest in the human touch. And the results speak for themselves: ask any long-standing Amex cardmember why they willingly pay the substantial card fees each year and the answer inevitably includes anecdotes of great service moments.
So here are three ways to leverage that human touch to grow loyalty in today’s AI world:
- Re-invest AI-driven cost-savings
This may sound obvious, but few brands do it well. AI appeals to executives because it cuts costs. But instead of just banking those savings, the smarter move is to reinvest them in better service.
The Commonwealth Bank of Australia (CommBank) did just that. After launching a GenAI chatbot, they used freed-up resources to cut wait times for customers who still need human support. That small move made a big impact – wait time is one of the top customer experience pain points in banking.
They could take things even further by re-investing in more capable support staff, increasing first contact resolution rates and creating more delightful customer moments. Either way, they chose to improve the experience, not just reduce costs.
- Use AI to supercharge, not just replace, front-line employees
Giving staff access to ChatGPT or Perplexity for internet research is not enough. Large language models (LLMs) have the power to make internal knowledge repositories accessible for human agents more easily and quickly, and to assemble relevant information with personalized recommendations for a specific customer in seconds. A huge boost to both employee and customer satisfaction.
DBS Bank in Singapore did this well. They applied an LLM to their support team’s full knowledge base and past case notes. When a call comes in, the AI listens and solves problems in real-time, giving the representative exactly what they need for a tailored and effective response. No guesswork, no more “may I put you on a brief hold?” Customers get better answers and faster solutions, with big benefits on both sides.
JPMorgan Chase uses a similar approach for its relationship managers. These bankers handle large portfolios and are bombarded with communications from dozens of clients each day. With AI, they get real-time insights and personalized suggestions for each customer on the spot. The result? Each interaction becomes more personal, and satisfaction increases.
- Combine LLMs with classic machine learning
Ever since ChatGPT disrupted the world, “AI” has become shorthand for LLMs. But not all AI has to be generative, and not all AI value in financial services comes from chatbots – regardless of how smart they’re becoming.
All around us, classic machine learning models are quietly shaping much of the digital world and continue to evolve rapidly in their effectiveness. Your personalized social media feed, airport face scans, and self-driving cars are all powered by AI, but not by LLMs. Collaborative filtering, reinforcement learning, different types of neural networks, and even more simplistic models such as decision trees are at work here behind the scenes. While LLMs will keep evolving, many immediate gains in personalization will continue to come from these proven machine learning techniques.
Take Capital One. Their use of machine learning to dynamically change the online banking UX based on user behavior has driven a double digit percentage lift in engagement. Their interface adapts to what each customer is likely to need, tailoring how information and navigation are prioritized, creating smoother and more relevant experiences.
And this matters. Today’s customers expect every brand to know them and provide relevant experiences rather than a flood of information. Whether it’s a custom offer or a smarter interface, personalization drives brand preference and loyalty.
The takeaway: The brands that combine AI and the magic of the human touch to elevate each customer interaction will be the ones that win.
