Small Banks: Crafting a Rewards Program

Small banks often find themselves competing against behemoths of the same industry that boast unlimited resources and networks. By understanding their customers’ specific needs and combining them. With innovative loyalty management software, a small bank can create lucrative bank reward programs. That not only match but can even outshine their larger cousins. 

Let’s find out how small banks can compete against the big sharks using bank rewards programs.  

Bank Rewards Program: An Overview  

Bank rewards programs are the cornerstone of customer retention strategies throughout the financial services industry. In fact, a 2023 study by Mercator Advisory Group has found that nearly 60% of U.S. Consumers have enrolled in a bank rewards program. Examples include cashback offers, purchase points, travel perks, and banking service discounts. For smaller banks, leveraging this trend presents an opportunity as much as it has already become essential. To survive in the highly competitive market.  

Small Banks Advantage  

The big banks can have the advantage of scale, but the little banks have this unique ability to offer customized services. In some ways, this personal touch can be a significant differentiator in an overly occupied market. According to a 2022 survey conducted by J.D. Power, customers of smaller banks were more apt to report higher satisfaction levels. Than those of national banks, largely due to personal relationships they cultivated with their banking representatives. This is the relation-based approach that can be easily incorporated with a rewards program, whereby small banks can offer personalized rewards for a more profound belief among their customers.  

Crafting a Competitive Rewards Program  

Small banks must know how to compete, zeroing in on just a few strategies that drive the design of their reward programs.  

Personalization and Customization:

Small banks can utilize loyalty management software to analyze customer data and offer personalized rewards. For instance, give additional points for spending in categories that a particular customer frequently shops in, or provide discounts on loans and other banking services that align with the customer’s financial goals. The more personal the rewards, the more relevant and valuable they seem, which would result in greater customer participation.  

Community-centric rewards:

It can include anything from discounts at local restaurants, shops, or service providers. With much deeper roots in their local communities, smaller banks can appeal to that with rewards that benefit local businesses. This will not only build the bank’s relationship with its customers but also provide the sense of community often missing from larger banks.  

Seamless Digital Integration:

In the age where everything is going digital, there must be seamless integration-ease of access to reward programs via mobile applications and online platforms. Small banks moving ahead need to invest in easy digital solutions for customers to view their rewards, redeem points, and receive personalized offers in real time. To support this, an alarming percentage of 85% of US consumers said they would use digital channels to do their banking—a fact well pointed out in Deloitte’s 2023 report—showing the critical importance of digital integrations expected for any rewards program.  

No Opaque or Complex Structures:

The most common complaints about the rewards programs of large banks are that they are opaque and complex. The Easily comprehensible bank rewards program is the new in that allows small banks to compete effectively with large banks. Clear communication regarding the earning and redemption of points enhances customer satisfaction and loyalty.  

Innovative Partnerships:

A partnership with a fintech company or other third-party provider can extend rewards options for a small bank without requiring robust internal resources. These may be extended to broader travel rewards, online shopping discounts, and even some investment-related perks. By partnering with innovative partners, small banks can provide a diverse and appealing portfolio of reward offerings that are competitive with the largest banks.  

Small Banks Giving a Neck-to-Neck Competition to the Big Players  

One of the small banks in the United States has succeeded in establishing a rewards program that is on par with large ones. For instance, Lake Trust Credit Union, based in Michigan, initiated a rewards program, including personalized experiences like admission to special local events or discounts on community services. An obvious result of this was increased customer retention, along with drawing new members appreciating the community-related approach.  

Meanwhile, California-based First Republic Bank carved its niche for super-personalized services and bespoke rewards for high-net-worth customers. This has helped this bank retain its customer base notwithstanding pressures from larger banks.  

Read More

Role of a Loyalty Management Software  

In general, for an effective rewards program to be operated by a small bank, an investment in advanced loyalty management software is required. Such software automatically provides personalization, introduces analytics to measure the effectiveness of such programs, and provides insights for how to continually improve. In terms of making their rewards programs burdensome, small banks apply technology in facilitating experiences described as both high-touch and high-tech, thereby meeting the expectations of today’s digitally savvy customer.  

As a small bank, you can find a perfect loyalty solution in Novus Loyalty. Novus Loyalty is a leading loyalty management software offering customized loyalty programs for banks and fintech players.