We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.
Finance

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

What is Relationship Banking?

Malcolm Tatum
By
Updated: May 16, 2024
Views: 14,457
Share

Relationship banking is a process that involves proactively anticipating the needs of individual bank customers and taking steps to satisfy those needs before the client presents them. The underlying concept of this approach has to do with developing more comprehensive working relationships with each client, assessing his or her individual situation, and making suggestions for various services offered by the bank to help improve the financial well-being of the customer. This approach is often associated with smaller banks that utilize a more personal approach with customers, although an increasing number of large bank corporations are beginning to encourage similar strategies in their local branches.

At the root of relationship banking is the idea that the institution and the individual customer are partners with a common goal: improving the financial security of the customer. For this reason, the client support representatives within the bank are constantly seeking to understand what customers do and don’t like about the services offered by the bank, how they are presented, and how to identify which of those services are likely to be beneficial to each customer. This type of proactive approach is very different from the reactive approach of utilized by many banks over the years, in which the bank essentially establishes its suite of services and the qualifications for obtaining them, then waits passively for customers to approach them. With relationship banking, the representatives of the institution don’t wait for customers to come to them; they go to the customers with a plan of action.

Traditionally, smaller banking institutions have made efficient use of relationship banking as a means of competing with large banking corporations. By focusing on personalized service, encouraging employees and officers to recognize customers when they enter the establishment, and taking the time to recommend services that are highly likely to be helpful for the individual customer, a locally owned bank can often maintain a solid clientele even if the large conglomerate down the street is offering what appears on the surface to be competitive rates and great deals on mortgages and other types of loans. In fact, the local bank may be able to match those rates, and without some of the hidden fees and requirements found with the larger concern.

There are advantages and drawbacks to a relationship banking approach. One benefit has to do with getting information into the hands of customers that is highly likely to result in a better financial outlook for each of those customers. Since the bank brought this information to the client instead of waiting for the client to ask for it, there is an increased chance that the customer will feel more like an individual and less like a statistic to the bank. At the same time, some customers resist relationship banking, feeling that this more personalized approach is nothing more than a selling tactic, designed to entice clients to open accounts they don’t need and commit to paying for services they don’t want. When this is the case, the relationship-driven approach can actually cause a customer to leave, rather than strengthening the relationship.

Share
SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Malcolm Tatum
By Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing to become a full-time freelance writer. He has contributed articles to a variety of print and online publications, including SmartCapitalMind, and his work has also been featured in poetry collections, devotional anthologies, and newspapers. When not writing, Malcolm enjoys collecting vinyl records, following minor league baseball, and cycling.
Discussion Comments
Malcolm Tatum
Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing...
Learn more
Share
https://www.smartcapitalmind.com/what-is-relationship-banking.htm
Copy this link
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.