The banking world is evolving faster than a contactless payment. Customers no longer settle for just competitive interest rates or a wide range of services—they want it all. Personalised experiences, smooth onboarding, instant support, and an empathetic human touch (even if it’s delivered by a bot) are the new norm. Banks, in turn, are racing to meet these demands, but at what cost?

In the financial sector, customer acquisition cost (CAC) is a number that keeps CFOs up at night. With the average CAC now hitting £723 for B2B and £136 for B2C , banks are shelling out big bucks just to get new customers through their virtual doors. And while this might look like a necessary evil, it’s also a golden opportunity. With the right strategies, it’s entirely possible to attract new customers without breaking the bank.

But before we dive into the strategies that can turn CAC challenges into wins, let’s start with the basics.

What is Customer Acquisition Cost in Banking?

CAC, short for Customer Acquisition Cost, represents the money a business invests to gain a new customer. For banks and credit unions, this means getting new clients interested in their services by showcasing their advantages over other financial institutions. At its core, Customer Acquisition Cost (CAC) is the price tag on getting a new customer to join your bank. Think of it as all the effort (and money) you invest to make someone think, “Yes, this is the bank for me.” From glossy ad campaigns to tailored WhatsApp messages, CAC includes every resource spent wooing a potential customer.

Here’s the tricky part: today’s customers are savvier than ever. They’re not just looking for competitive rates—they expect services that are digital-first, effortless, and tailored to their needs. That means balancing shiny perks like promotional offers with seamless experiences that don’t make them feel like they’re signing up for a rocket science degree.

What Are Some Examples of Customer Acquisition Costs in Banking? 

Banks and credit unions invest in various touchpoints to get customers on board. These include:

• Advertising Campaigns: From billboards to Instagram reels, ads help banks get noticed.
• In-Branch Displays: Posters, screens, and promotional materials to attract walk-ins.
• Point-of-Purchase Promotions: Special offers like cashback rewards or zero-interest credit cards.
• Social Media Campaigns: Building engagement with customers where they already spend their time online.
• Direct Mail and Email Campaigns: Reaching out to potential customers with personalised messages.
• Website Features: Smooth digital onboarding tools like pre-filled forms and secure identity verification.

The goal?

To create an experience that’s appealing and efficient. But here’s the catch: if these costs aren’t optimised, your CAC can spiral out of control. That’s where smart strategies—and the power of conversational AI—come into play.

Three Strategies for Lowering Customer Acquisition Costs in Banking

Here are three straightforward measures to refine customer acquisition strategies and potentially decrease a bank’s CAC:

1. Minimise Friction

Friction in the customer journey is like sand in your shoes—it makes people quit before they even get started. Shockingly, 40% of consumers abandon the onboarding process with a bank because it’s too time-consuming, jargon-heavy, or clunky. That’s four in ten potential customers saying, “No thanks!” just because the process feels like a chore.

A survey revealed that 40% of consumers abandon the onboarding process with a bank. The primary reasons for this include a lengthy process, time-consuming authentication, and complexities in form filling.

The fix? Think of it like decluttering a room. Every unnecessary step needs to go.

Here’s how banks can tidy up their onboarding processes:

1. AI-powered onboarding can drastically reduce the time spent on Know Your Customer (KYC) and identity verification. For instance, an Infosys report says that transitioning from traditional methods to digital onboarding can reduce the time from 8-20 days to just 30 minutes—a time-saving of over 95%.
2. Utilise live chats for customer engagement and employ conversational formats for form completion, veering away from traditionally extensive forms.
3. Nobody wants to read a banking manual just to open a savings account. Swap stiff banking language for a conversational tone. Terms like “APR” might make sense to you, but to your customer, it’s gibberish.
4. Pre-fill customer details, use facial recognition for ID checks, and leverage AI tools to make onboarding as seamless as a tap-to-pay transaction.
5. Leverage automation tools such as conversational and generative AI to expedite processes and enhance efficiency for customers. According to Juniper Research, the adoption of AI-powered solutions within the banking sector is projected to generate cost savings exceeding $7.3 billion by this year.

When done right, AI doesn’t just answer questions; it creates conversations. No wonder 88% of banking executives believe conversational AI will become the major customer service channel.

Suggested Reading: 10 Conversational AI Use Cases in Banking to Streamline Operations

2. Incorporate Personalisation

Let’s be honest—everyone loves a little personal touch. Whether it’s seeing your name artfully written on a coffee cup or getting a spot-on Netflix suggestion, personalisation has a way of making people feel understood. In banking, the stakes are even higher. Personalised experiences can boost customer satisfaction by 20%, and satisfied customers are far more likely to convert.

But let’s set the record straight: personalisation isn’t about sprinkling a first name on an email and calling it a day. It’s about truly understanding your customer’s needs and tailoring your approach accordingly.

This is where conversational AI steps in and shines. Here’s how it elevates personalisation from good to great:

1. Use names wisely: Address customers by name in every interaction (and yes, even the AI Agents can do this convincingly).
2. Tailor recommendations to their needs: AI can suggest services based on a customer’s unique goals—like offering a budgeting tool for a millennial saving for their first home or retirement plans for a Gen X customer looking ahead.
3. Ditch the jargon: Terms like “APR” or “AML” might make sense to your team, but to customers, it’s Greek. Conversational AI transforms stiff banking lingo into clear, relatable conversations.

3. Stay Present

If there’s one thing millennials and Gen Z love, it’s instant gratification. Emails and phone calls? Too slow. Customers want answers right now, whether it’s on WhatsApp, Instagram, or a live chat window. The banks that show up where their customers hang out are the ones winning hearts—and wallets.

The stats back it up: Banks using social media for customer engagement have seen a 15% increase in customer acquisition. And it’s not just about being there—it’s about being available. Here’s how:

1. Integrate chatbots into messaging platforms like WhatsApp and Facebook Messenger. AI-powered bots can handle the FAQs, while human agents can step in when things get tricky.
2. Build an omnichannel presence. Whether it’s through a social media DM, an AI Agent, or a phone call, ensure your customer’s journey feels seamless and connected.
3. Offer 24/7 support. Because when your customer’s card gets declined at midnight, they need help now, not during office hours.

Why Retention is the Real Winner

Here’s a bonus tip: customer retention is often more profitable than acquisition. A 5% increase in customer retention can lead to a profit bump of 25-95%. So, while slashing CAC is important, focusing on the lifetime value of a customer can yield even better results. The trick? Keep them engaged, satisfied, and coming back for more.

Elevating Customer Experience to Reduce Customer Acquisition Costs in Banking

Banking is no longer just about numbers—it’s about conversations. Conversational AI isn’t just a tool; it’s a revolution. From slashing onboarding times to improving satisfaction rates, it’s the secret weapon for banks looking to cut CAC without compromising on customer experience.

At Verloop.io, we’ve helped businesses transform their customer acquisition strategies with AI-driven automation. Want to see how we can help you?

Schedule a demo with us today and get started!