How financial institutions can deepen customer relationships

Relationships between financial institutions (FIs) 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 FI. Always-on and always available banking have become mandatory for any FI looking to deepen (and retain) the relationship 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 financial institutions seek to deepen relationships, is the blurring of lines between the services and solutions they offer to small and medium-sized businesses (SMBs) versus individual customer accounts.

Traditionally, financial institutions have treated SMBs differently than enterprise or individual customers. In many ways, the services and potential solutions available to this classification of business have often been overlooked.

In an article published by Forbes, this neglected market carries ominous undertones for financial institutions that fail to heed the warning signs. According to Forbes, most established FIs have neglected SMBs for over a decade. One large bank executive addressed this neglect by stating the following disparity: although small and mid-sized business clients account for more than half of revenue (in comparison to retail customers), only 10% of the bank's digital spend budget is allocated to digital services for SMB customers.

As this article and many others allude, SMB plays an important and often misunderstood role within the financial services sector. Not only do many customers cross the line between individual and SMB account holders, most 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 institutions to add digital services to cater to customers that are increasingly seen as "digital natives" and who expect their banks to be as well.

Additionally, this shift will empower customers with the self-service capabilities they often state as important to them, while helping to create a rapport with relationship managers when and where the customer desires.

Most importantly, a stronger approach towards SMB driven digital services will let the customer – whether SMB, enterprise, individual or a combination of all three – apply online for services that help them, and in turn, the FI 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 financial institutions 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. FIs 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.

About the author, Paul Stanczak

Paul Stanczak is VP of Sales at Linedata Lending & Leasing. A tenured sales and marketing executive with over 15 years of experience in the fintech, media, and automotive industries, Paul believes in technology's ability to attract customers, increase revenue and provide an irreplaceable service to the finance community.