Posted by MeridianLink | February 15, 2024

The Invisible Threat: Understanding & Overcoming Silent Attrition in Your Institution 

The materials available in this article are for informational purposes only and not for the purpose of providing legal advice. You should contact your own advisors with questions regarding the content herein. The opinions expressed in this article are the opinions of the individual authors and may not reflect the opinions of MeridianLink, Inc.   

Chances are, you’re not the only financial institution in your consumers’ lives. 

The digital age of banking is here, and with that shift has come a rise in neobanks and other non-traditional, often digital-only financial institutions (FIs) offering your consumers attractive rates, lower fees, and a frictionless, convenient online experience.  

It’s also led to increased instances of silent attrition—a phenomenon that’s tough but critical to detect early to have the best chance at repairing and retaining faltering consumer relationships. 

What Is Silent Attrition in Banking? 

Silent attrition occurs when a consumer gradually shifts their business to FIs outside of their primary institution. And it’s often described as “silent” because, by the time the FI notices the decline in business, it’s usually too late to retain that consumer. 

If not detected and addressed early, silent attrition can have short- and long-term repercussions on your institution, from less effective cross-sell initiatives to plateaued portfolio growth. But don’t let all this scare you! In the digital age of banking, no FI will ever be able to fully stop silent attrition. However, there are several steps you can take to drastically decrease it, and they all center on fostering consumer relationships rooted in understanding, trust, and loyalty. 

Loyalty Is Earned 

According to a 2023 Bain & Company report, neobanks and non-traditional FIs tend to offer more advanced, convenient technology alongside more affordable products and services, both of which are very attractive to consumers across generations (the same report found that consumers old and young are increasingly doing business with neobanks.) 

But beyond what the competition offers, it’s also imperative to examine what your FI offers—or doesn’t offer. While your products and services may be comparable to those of neobanks, what about your digital experience? Your consumer outreach strategies? Today’s consumers demand fast, personalized service with minimal friction. One of the best ways to avoid silent attrition seems obvious enough—by meeting that demand through tailored offers and smooth experiences—and yet, many FIs still seem to miss the mark

Why? Because while digital channels have become more common in traditional FIs, many of those FIs tend to stop at simply offering the technology when they should be optimizing it to build consumer trust and, ultimately, loyalty. Any institution can offer attractive rates and digital interactions, but an institution that uses its technology to create consistently effortless experiences and demonstrate that it understands and can meet its consumers’ individual needs will always come out on top. 

With so many options at consumers’ fingertips, loyalty is no longer a given for traditional FIs—it must be earned. A consumer will be less likely to seek services elsewhere if your FI has proven itself as a trusted advisor and partner. That means creating intentional rather than transactional experiences ranging from targeted offers and financial advice based on unique circumstances to personalized self-service options. 

Listening for the Silent Signals 

The first step to solving any problem is identifying it. Let’s learn how to detect the warning signs of silent attrition so you know where to start in building those loyal, lasting bonds. 

As we said earlier, there’s a reason it’s called silent attrition: identifying it before it’s too late is tricky since it involves a gradual shift away from your institution that doesn’t raise any immediate alarm bells. But that’s nothing a little data diving can’t expose! 

Business intelligence tools and some demand generation solutions, such as MeridianLink® Insight and MeridianLink® Engage, respectively, can analyze your data and uncover additional insights to help you flag potential silent attrition. For example, data analyses could detect changes in a consumer’s transaction history that may indicate that while they haven’t closed their account, they rarely use it. From there, the FI could reach out with a personalized offer designed to re-engage that consumer. Monitoring consumer activity with advanced data analytics is an excellent way to discover gaps in your relationships and can help you piece together why they may have occurred in the first place, as well as how to best solve them based on the consumer’s profile. 

These analyses can also be used proactively: with fresh insights into each consumer’s individual goals and circumstances, you can reach them with customized offers, messaging, and advice that better align with both present and future needs. This builds additional rapport with your consumers, as each relevant engagement shows them that you genuinely understand them and are committed to helping them succeed both now and in the long run. Over time, this rapport can blossom into a loyal relationship wherein the consumer expects your FI to have solutions, meaning that they likely won’t even think to shop around for services before choosing to re-engage with you. 

Rekindling the Connection 

So, you dug into the data and found some red flags. Now, it’s time to put that data to use to create compelling, relevant outreach to rebuild the consumer relationship. 

You may have noticed words like “personalized, “tailored,” and “individual” cropping up a few times in this article. That’s because personalization is perhaps the most vital component to preventing silent attrition

While you may be excited to tell all your consumers about every single product and service your FI offers, not all consumers will want, or even need, to hear about each offer. In fact, bombarding consumers with a steady stream of communications may push them further from your FI by leading them to think, “This isn’t relevant to me. Is my FI even paying attention to my needs, or am I just another name on the mailing list?” 

Personalized Communication To Combat Silent Attrition 

That’s why quality communication matters—communication that proactively addresses or directly responds to consumers’ most pressing needs. Using insights from your data analyses helps you craft these relevant outreaches to deliver the right solution to the right person at precisely the right time, creating more valuable interactions that will keep your consumers engaged

The most successful personalized communications go beyond data analyses and involve bringing human empathy into the digital experience through a genuine understanding of the person behind that data. No, that doesn’t mean you need to know every single facet of their lives. It does, however, mean that you should take the time to make sense of data reports as they relate to those you serve. It could be the difference between discovering an additional engagement opportunity and handing that opportunity to the competition when the consumer realizes the need for themselves. Those consequences can be devastating—especially if the consumer then realizes that your FI never even saw that need coming. 

Creating a Culture of Retention  

Once you’ve begun re-engaging those consumers on the fence, keeping them engaged becomes key. If you want your consumers to stay, give them a reason to keep coming back. That involves creating a culture of retention within your FI that focuses not only on revenue but also on delivering a consistently stellar consumer experience—from maintaining fast, seamless digital channels to providing valuable, relevant, and timely solutions and outreach. 

Here are a few ways you can accomplish this: 

  • Regular Check-Ins: If you want to know how your consumers feel, just listen to the data! Periodic data analysis uncovering indicators such as churn rates can help you take a pulse on consumer feelings. 
  • Personalized Rewards: Rewards that align with individual interests are easy, effective ways to keep your FI top of mind for consumers. Additionally, more general loyalty rewards that incentivize interactions with accounts—like rewards for logging into a checking account a certain number of times in a month—can further boost engagement. 
  • Positive Digital Experiences: Delivering a digital experience that checks all the boxes—intuitive, convenient, personalized, consistent, and secure—minimizes churn by removing barriers to application completion and providing additional value to consumers with features such as in-application cross-sell. 
  • Community Building: Fostering a sense of community within your relationships goes a long way in building loyalty. Offers that directly help individuals meet stated goals, financial advice based on consumers’ circumstances—such as parenthood, homebuying, or debt—and even volunteering locally all help to strengthen bonds by conveying that your FI understands and cares about those they serve. 
  • Valuable Guidance: Offering knowledgeable, personalized financial guidance positions your FI as a trustworthy authority with your consumers’ best interests in mind. This guidance can manifest in many ways, such as digital self-help resources anticipating common questions and experiences or one-on-one assistance in navigating financial needs or wants.  

Business Intelligence Helps Sustain the Momentum 

Congratulations! By this step in the process, you’ve already been putting in the work to keep engagement up and silent attrition at bay. Now it’s time to maintain that momentum—after all, a consumer-centric culture of retention is a constant process. 

The above practices, when paired with advanced intelligence and marketing technology such as those offered by MeridianLink, can help your FI expertly sift through the data to create robust analytics and reports that help you better understand your consumers and deliver on their needs. With the right technology in place, maintaining your hard-won relationships is as simple as staying on top of your data trends and outreach strategies to ensure your FI continuously evolves alongside your consumers. 

Want to learn more about how MeridianLink can help you minimize silent attrition? Schedule a quick demo. 

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