How to move from transactional to relational banking | ATM Marketplace

If there is one constant need for banks, it is the need to acquire new customers and to convert them into lifelong customers; however, accomplishing this task is no easy feat. Banks have to be able to move from a transactional relationship to one that is based in the customer’s financial wellbeing. During a session at the Bank Customer Experience Summit, held in Chicago from Sept. 13 to 15, panelists shared insights into the topic.

Jean-Pierre Lacroix, president and founder of Shikatani Lacroix Design Inc., moderated the panel with Andy Cease, manager, product marketing, Entrust, EJ Kritz, EVP of training and customer experience at ath Power Consulting, Tom Long, founding manager of The Long Group and Maria Tchernychova, head of U.S. customer lifecycle and digital channels marketing at BMO Harris Bank.

Lacroix kicked off the panel by discussing the problems many banks are facing with building relationships with customers. Only 24% of customers view a bank as a source of advice.

“51% of consumers are worried about finances. There’s 52% potential revenue loss from emotionally disconnected banks,” Lacroix said.

Some banks embrace digital only channels, but Lacroix pointed out that these banks tend to lose customers, rather than gain them, as they go to fintechs.

On the other hand, customers post-pandemic are going back to banks to seek advice. They aren’t looking just for those transactions but rather to get help.

And of those banks that meet those emotional needs, their customers are far more likely to go to that bank for other transactions.

Tchernychova concurred with this assessment. She said that when her family was moving to Canada, they needed a bank and BMO was there for her father and helped him get set up. Her father appreciates this relationship so much he has remained a customer for 25 years, although he is very frugal and constantly looking for the best deals with other companies.

A relational model, Tchernychova said, is “a more consultative and empathetic way of customer interaction.”

In order to create this type of interaction, the panelists gave a variety of answers.

Kritz said banks need to “pump the breaks digitally” and look at who they are hiring. Many banks only hire other bankers and don’t look for those personalities that can really connect with customers.

“Flip it around. Hire for the culture, hire the awesome human being. I’d rather hire a great human being and teach them how to be a banker second,” Kritz said. “I’m not gonna have a relationship if I don’t think you’re an awesome person.”

Long pointed out that banks have to get through the churn of transactional customers to create relational customers, who are the real source of growth for the bank.

“Every FI has to deal with the following fact: we are literally and figuratively in a war of attrition. With any war, success occurs over time,” Long said.

Tchernychova said that many banks simply don’t put enough emphasis on relational key-point-indicators instead preferring acquisition of business, which can be an issue.

Long said that while many banks do prefer to gain new business, 12 times of the real growth comes from existing clients, because banks haven’t dealt with the “transactional churn.”

In order to get beyond this, Kritz said banks need to grow out of the “we have always done it that way,” mindset.

Kritz also said that banks need to ask “why” more to be able to get the right analytics on customers.

One way to address these challenges is to adopt omnichannel strategies, Crease said.

“11,000 financial institutions that have brick and mortar can leverage them and incorporate them into an omnichannel experience that starts on a phone and can move to the location,” Cease said.

On another level, Tchernychova said banks should “make sure you have an outbound program, call-base, digital that really check in on customers.” Her bank would do wellness checks with clients during the pandemic as a way to see what help they needed.

In order to do this, Tchernychova said banks need to invest in analytics that can identify those key performance relational indicators.

The ultimate goal of all these tactics, Long said is to unlock that “purchase intent,” with data so bankers can have “personalized one-to-one conversations” with clients that are consultative.

“At the end of the day, it’s a people business,” Long said.

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