Top of the Wallet: Brazilian Banks Battle to Secure Primacy

Written in partnership with Rob Markey

Bank executives are increasingly focused on becoming their clients' first choice in banking, believing this will drive sales of additional products and services, ultimately bringing more money to the bank.

NPS Prism data in Brazil reveal a strong correlation between primary bank selection and the number of products owned by customers. Those who designate a specific bank as their primary institution own an average of 2.7 products from that bank, significantly higher than the 1.9 products owned by non-primary clients. To achieve this, many banks are investing in strategies to measure and grow this "first choice" status, often referred to as “primacy.”

This article aims to explore the concept of preference and its connection with primacy.

Common Strategies to Become Clients' First Choice

Wage Deposits: One approach is to get more clients to have their paychecks deposited automatically at the bank, as these clients tend to use the bank more often. Banks also should offer a remarkable transactional experience as well as work on loyalty programs to keep those clients engaged.

High-Transaction Products: Expanding their base in high-transaction products like checking accounts and credit cards helps banks maintain their relevance in clients' everyday lives. While there is a correlation between the ownership of these products and being the client's first choice, banks must deliver a great experience for these products if they want to earn their customers’ trust for serving additional needs.

Below, we demonstrate that primary clients tend to designate their primary bank for C&S, particularly in the case of incumbent banks, largely due to the receipt of wages in these institutions. Conversely, clients of digital banks show a similar level of preference for C&S and credit cards.

Competitive Landscape

This pursuit of being the first choice reflects aggressive competition among banks. Clients are increasing the number of banking relationships they maintain. For instance, the proportion of Brazilian clients with only one bank relationship has declined from 22% in 2021 to 19% in 2024. The average number of banking relationships has grown from 3.0 to 3.8 during this period, with high-income clients holding even more.For Checking & Savings the average number of relationships is 3,3 in 2024, credit card 2,3 and investments 1,7.

Understanding Client Preferences

Despite the clear benefits for banks, the concept of being the first choice is not well understood by clients. Many customers have different primary banks for different purposes, such as one for payments and another for savings. This makes the concept more challenging to address.

Our research aims to define what being the first choice truly means to clients, how to measure it, and what it means for banks. A bank holds the primary position when a client prefers banking with that organization over others. This preference can be general or specific to a product category.

There are very good metrics for engagement like product ownership, and experiences that tend to delight and ones that can frustrated and annoy clients, which allow banks to infer customer preferences.

We analyzed NPS Prism data to explore the differences in how clients evaluate their banks on an individual level. Each client has multiple banking relationships, so we examined the scores clients assigned to their primary bank compared to another bank they also use. A positive score gap indicates a stronger preference for the player 1, while a negative gap shows a preference for bank 2.

For example, imagine a customer who has a relationship with Bank A and considers it their primary bank. When asked about the likelihood of recommending Bank A, the customer gives it a score of 9. This same customer also has a relationship with Bank B and, when asked the same question, gives Bank B a score of 7. In this scenario, the preference for Bank A over Bank B would be a difference of 2 points (9 minus 7), offering a clear indication of the customer's stronger preference toward Bank A.

Our first finding is that the number of products at a given bank goes up as a degree of preference rises, particularly among established banks that offer a wider range of products. Greater increases accrue when you go from “not preferred” to “preferred.” There seems to be a tipping point after which there is no substantial change in the number of products acquired. Gains are bigger for incumbents today because they offer more products, neo banks will gain more as they introduce more products.

The second finding is that players with higher relative likelihood to recommend tend to have higher primacy.

In summary, customer preference plays a crucial role in the overall customer experience ecosystem. The Net Promoter Score® (NPS) remains valuable for predicting future client behavior by gauging their likelihood of staying longer, buying more, forgiving occasional errors or problems, and recommending to others. Preference serves as a critical factor in determining how and when a customer chooses among available alternatives. For instance, consider a scenario where a client holds a similar number of products with each of two different banks. That customer’s preference – the extent to which they favor one bank over the other – will ultimately determine which bank gets the lion’s share of their business. In other words, their preference determines which of these two banks they regard as their primary bank. Bank leaders should focus on the question of how to earn this preferred spot and, when they achieve it, how to capitalize on the goodwill of the customer.

Some bankers mistakenly believe that selling more products drives customer preference. In essence, they believe (at least implicitly) that selling a customer more products causes them to prefer their bank. A decade ago, a major US bank pushed additional products on customers, believing this would cement relationships. Instead, this approach undermined trust and led to fraudulent behavior.

The Complexity of Achieving Primacy Status

However, achieving first choice status is complex. Some digital players are highly rated but still trail the leader in preference. This shows that many factors influence customer preference, including competitors' performance and the challenges of switching banks.

Ultimately, high customer satisfaction and trust increase the likelihood of clients considering the bank for more of their needs. While high Net Promoter Scores (NPS) indicate a propensity to buy more, it should come as no surprise that banks must still offer excellent products and execute well on marketing and sales.

To win in today’s competitive market, bankers must prioritize understanding and meeting client needs in a relentless quest to become their first choice, rather than relying solely on cross-selling strategies. Delivering more value to bank clients builds trust, earns the bank the right to serve more of a client’s needs, enhances loyalty, and results in long-term profitable growth.

This article introduces the concept of preference for the first time. In subsequent articles, we will explore in detail strategies for building preference and the key drivers behind it.