Relationship Banking

Relationship banking is when financial institutions use their personal knowledge of the borrower over time to overcome roadblocks. This personalized decision-making gives the loan approval process more flexibility.

Reasons to Improve Your Relationship Banking

By taking the time to build relationships with your clients, relationship banking increases revenue for lending institutions. It increases the likelihood that the borrower would return to your institution for future loans. That means there could even be more referral business.

Customers like personalized service (who doesn’t love some individualized catering?). So when you build a personalized relationship with each and every one of your customers, that gives your financial institution an edge over the larger institutions who don’t have the same proximity to the community and have a larger customer base.

And, long-lasting connections with your customers allows you to stand out against competing lenders who are all vying for the same business.

On the other side of lending, your borrower benefits, too. They don’t need as many collateral requirements over time. That personalized service goes a long way in increasing the likelihood of loan approval and the longer your relationship lasts with the client – there’s more understanding of their needs. It’s also important to keep in mind that there would be increased credit availability the longer the relationship endures.

How to Improve Your Customer Relationship 

Strengthening your relationship with the client means upping your customer service game! First and fore most, be yourself and be genuine. Your customers will be able to see right through the fake smiles and talk. Follow these steps to start improving your relationship banking:

Get to Know Your Customer’s Needs
Each borrower has different needs. Research your prospective borrower before you meet to get a sense of his or her needs. Start every interaction with your client by asking questions such as, ‘What don’t you like about your business and why do you need something different?’ Make sure to follow up with more specific questions such as, ‘What are you trying to accomplish?’ You want to be able to offer a solution.

Listen Up
In most situations, the lenders do most of the talking. But, if you don’t listen to your client, you may not understand your client’s issue enough to offer a solution.

The financial services association, BAI, recommends to “Listen and solve. That’s how you build ongoing relationships one transaction at a time.”

Be a Consultant
Don’t be a pushy salesman attempting to control the outcome. Simply demonstrate your lending expertise and provide guidance. Or else, your customer is out.

It’s More than Business
This is the most important tip we can offer. Your customer has a personal life – a family, birthday, holidays. Show them that you care by sending him or her a birthday card, thank you cards, and investing time into learning about their children, spouse or background. If your customer feels a personal connection with you, you’ve won their business.