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How Financial Institutions Can Deepen Customer Relationships

How can Financial Institutions begin deepening their customer relationships?

Paul Stanczak

Relationships between financial institutions and their customers have evolved more in recent years than arguably at any other time in the history of the financial services industry. The advent of mobile technology, faster and more affordable internet, and FinTech companies have empowered customers to do more for themselves and expect a retail-like experience from their bank. Always-on and always available banking becomes table-stakes for any financial institution looking to deepen relationships with their customer base.

Adding fuel to the fire, COVID-19 exacerbated this self-service element defined by fewer physical interactions and the drive to further leverage customer data collection to improve and hopefully deepen customer relationships by increasing the value financial institutions provide to customers. For example, the pandemic precipitated the use of more detailed data analysis to better determine life stages and events for a more personalized connection with many financial customers.

This added push for more personalized services is leading banks to determine what advise a customer may need and how the services they provide may better protect customers struggling to pay bills or find work. The result is a drive for financial services to provide customers with the flexibility needed to adjust for difficult times. These flexibilities in the form of new services and solutions are here to stay because of the deeper customer engagement opportunities they provide.

Starting with SMB

One of the main changes we are witnessing in the financial services sector, as banks seek to deepen relationships, is the blurring of lines between the services and solutions they offer to their small and medium business-to-business services versus their individual customer accounts.

Traditionally banks treated small and medium businesses (SMB) differently when compared to enterprise or individual customers. In many ways their services and potential solutions that facilitated these classifications of businesses were overlooked. In a recent article by Forbes this neglected market carries ominous undertones for financial services firms that fail to heed the warning signs

According to Forbes research supporting this article, most established banks have neglected SMBs for over a decade. One interviewed digital executive for the piece, who represents a large bank, addressed this neglect by stating small and midsized business clients account for more than half the revenue we see compared to retail customers, yet only about 10 percent is budgeted for digital spend for anything having to do with digital services for business customers.

As this study and subsequent article alludes to, SMB plays an important and complex role often misunderstood within the financial services sector. Not only do many customers cross those boundaries between being individual and SMB customers within the bank, but most of those customers disapprove of being treated differently per role and in relation to enterprise clients.

Bridging the Divide with Digital and Data

Addressing these disparities requires financial services organizations to add digital services to cater to customers that are increasingly seen as “digital natives” and expect their banks to be the same. Additionally, this shift empowers customers with the self-service capabilities they often state are important to them, while helping to create rapport with bank relationship managers when and where the customer desires.

Most importantly, a stronger approach towards SMB driven digital services lets the customer, whether SMB, enterprise, individual, or a combination, apply for services online that help them -- and in turn – help the bank grow, and invest time in other areas that deepen share of wallet.

The effective use of data is essential within these digital initiatives to improve relationships. First, data is essential in providing better tailored customer and SMB profiles, and the contextualization essential to make sense of the copious amounts of data.

The effective use of data:

  1. Provides relationship managers with valuable information about customer needs
  2. Empowers banks with a stronger focus on a “help desk” approach towards tasks that deepen relationships
  3. Helps leaders concentrate on relationship building, including actionable intelligence based on data

The effective use of data also improves relationships by speeding up services. As a result, banks can use data to quickly process loan applications, suggest other products or services to customers, and present these options at exactly the right time, based on the data.

The Automation Solution

Banking and financial services is a complex sector. The multitude of archaic and modern technologies -- mixed with manual processes -- and varied consumer and regulatory data makes diving into a more digital environment onerous at best and seemingly impossible for many banks struggling to keep up.

Yet with the proper focus on automation predicated on a modern platform, improving bank operations with digital investments becomes not only approachable, but achievable in a relatively short period of time. Banks taking this approach can quickly achieve the speed and efficiency that delivers better outcomes for their SMB, individual, and enterprise customers. And better outcomes equal deepening relationships.