Most banks have long stated as a primary element of strategy that they are in the business of building customer relationships. But saying it and doing it are two very different things.
Relationship pricing, product bundling, and the like have proven somewhat effective in garnering multiple account relationships from customers, but we still find many banks with low cross-sell rates and a large number of single service customers. With the economic challenges many customers face today, it's time to rethink the concept of relationship banking.
A relationship is forged on mutual trust. It's characterized by open and often frequent communication. In this time of great economic challenge for millions of consumers across the country, banks have a tremendous opportunity to step up to the plate and become the source for information, assistance, and solutions.
Pull consumer credit back into the relationship discussion. Credit card companies have been rushing to freeze lines and raise rates in advance of regulatory intervention by the Fed. With credit and debit cards now central to how consumers pay for just about everything, there is an unprecedented opportunity for many banks to get back into the credit card business with a focus on how the card fits into the overall customer relationship - not how the card as an individual product can be profitable. Same goes for auto loans and mortgages. Yes - losses on these portfolios are climbing (and so credit unions are also hurting). But customers with good credit histories who can repay will still need to buy cars, buy homes, and pay for things (with the convenience that only a card offers)!
Get proactive about customer advocacy. From the CEO to the teller, the message now needs to be: we can help and we will work with you to get you back on your feet. Building relationships now means taking the time to sit down with customers, review in detail their current situation, and help them set goals and identify strategies to rebuild. And that leads us to:
Shift incentives toward service. In this environment, front line staff in the branches should be encouraged to spend time talking to customers without the conflicts that arise when they have stretch sales goals to meet. It can't be about what the staff can sell the customer; it has to be about how they can help the customer.
Put a big push on PR and communication and do it NOW. Get the word out that your bank is THE place to go for information, assistance, and solutions. The investments banks are gone; many big banks are pre-occupied with merger integration issues; large credit card originators are rushing to raise prices before the Fed acts; U.S. economic news remains grim; and consumers are focused on the security of their financial providers, not price. There is an unprecedented opportunity for traditional banks to build share by re-energizing the relationship banking model - but you need to act now!