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Many of the banks we work with are predicting a tough 2020: low interest rates, a still strong economy that calls for more caution in lending, some big banks expanding more aggressively, and Fintechs establishing themselves in niche markets, among other factors. Add to that mix the changing customer, many becoming more comfortable with making financial decisions by themselves and able to access the financial world with ease though their PCs or phones.

Some banks see building wallet share, meaning getting more of each customer and prospect’s banking business as the way forward, what many term relationship banking. But, how realistic is it for banks to expect to be able to provide substantially more products and services to a single consumer or business customer in an era in which disaggregation of financial services decisions is easier than ever and the quality of offers from bank and non-traditional rivals continues to improve?

Today, particularly on the personal side, many of us have created our own bank. Me:

• Business and personal checking accounts. At a big bank I still remain at because of inertia; the rest of my family has already left
• Credit cards with Amex, and three banks; no balances
• Mortgage with a Texas credit union whose “new” name I can barely remember, but which provided the lowest rate
• Three POS no-interest loans to buy a smart TV and two other items to furnish a new home. The lenders involved are Citi, TD, and Synchronicity.
• Investments with a nonbank investment advisor that has performed well

Having these ten vendors plus insurers is not much of an operational burden. I pay none of these bills by check, as used to be the case. It probably takes me five minutes in total to pay all monthly bills and that may be an exaggeration.

Convenience is not going to get me to switch or consolidate my accounts and, in any case, I am probably not a good candidate for relationship banking… too ornery, too set in my ways, and, I would like to think, too sophisticated (at least two of these three comments are true).

Banks need to evaluate what would get customers to bring more business to them and which customers both offer value and are open to that type of relationship; not all are. Different life cycle stages may require significantly different solutions, risk tolerance, and delivery channels. Banks will likely find themselves better suited to one segment versus another. For example, borrowers may move for a lower rate but their risk profile may not merit it; many customers like rewards, but rewards can be expensive for a bank; some want advice on how to manage their personal or business cash but banks need the technology to provide that cost effectively; others demand a fully digital experience while at the same time expecting access to a human when necessary. In short, it’s complicated, and most banks will need to pick their spots, emphasizing different product packages to priority customer and business segments.

Creating a solutions approach aimed at meeting a customer’s multiple financial requirements may face an even greater challenge than tough competitors and a reticent customer, namely, the bank itself. To provide a fuller customer solution banks have to:

• Create products and operate across silos
• Change the banker compensation system to get bankers to think bank wide rather than just focus on their own areas
• Recast pricing approaches to be relationship than product oriented
• Find consensus around where to focus (solutions and sub-segments)
• Lever third-party capabilities to close product/solution gaps
• Speed up product development initiatives
• Speed up IT change implementation
• In general, speed up, in part by delayering the organization

All of this is easier said than done and can be seen as a daunting task. What to do?

• Select initial priority segments for a relationship effort, based upon your current customer base, the quality of your products, and a competitive assessment. Be aware of spreading your bank too thin or, bluntly, overstating the quality and competitiveness of current products/solutions
• Begin with creating one (or more) packages aimed at the one (or more) segment(s) selected; this needs strong Product Management work, a willingness to change pricing, and an acceptance by top management that this initial effort may fail or need to be changed, a process Fintechs call pivoting. One issue is that managers may say they are willing to move from past approaches, but are they?
• Get bankers to buy in, that is communicate the program to them and pay them to sell it; for example, the banks we know that are best at deposit capture explicitly pay bankers to capture and keep them
• Track and alter the program based upon banker feedback and bottom line results

Some Relationship Banking Fundamentals: Bankers need to ask for more business (many do not); they have to ask for business with the right offer (many banks fail to consider this area, moving from one product area to another every few months); and, the bank itself needs to decide where to focus and which customer segments to and not to pursue.