Customer Engagement

Total Relationship Banking (TRB) is a BIG opportunity

Total Relationship Banking Opportunity

A new research report from Mercator Advisory Group reveals that while U.S. consumers want their financial institution to offer them better rates and rewards, only 38% of U.S. adults say their financial institution offers them a relationship rewards program that allows customers to accrue points, discounts, free services, or cash back based on their account balances, new account openings, the types of accounts held at the bank, or type of transactions made (such as direct deposits or using mobile app or ATM deposits). Only 29% of those surveyed say they participate in the rewards program.

By Wise Marketer Staff

These “Total Relationship Banking (TRB)” programs have been advocated by loyalty marketers for more than two decades, but as the Mercator report reveals, there has been very little action in the US marketplace. Execution is difficult, margins are sometimes thin and the various financial institution (FI) products operate on different business models than the traditional, transaction-based reward programs of FI credit or debit offerings. To add to the difficulty, the brand/category ownership of the various products are often siloed within the enterprise structure of the FI and no one wants to give up their control or their data.

We view the underdevelopment of TRB as opportunity lost. Mercator reports that nearly 3 in 4 participants in their FI’s relationship rewards programs are motivated to keep their accounts or expand their relationship with their financial institution. In fact, better rewards or offers at another institution is one of the top five reasons that consumers mentioned for switching banks. Improving these rewards can help promote deeper engagement and raise satisfaction and trust. Participants in these programs are more likely to be satisfied with their bank or credit union’s reward program (mentioned by 80% of participants). Retention and increased yield per customer are the major benefits for the FI.  TRB may be the ultimate cross sell strategy for a bank or credit union.

The Mercator report also indicates that customer loyalty is improving.  Only 12% of consumers say they switched financial institutions within the previous two to three years, the lowest percentage reported by Mercator since 2012.
“Consumers will be loyal to financial institutions that know them and provide value, rewarding them for loyalty and recognizing their banking relationship with better offers to improve their financial health,” according to Karen Augustine, manager of Primary Data Services at Mercator Advisory Group and author of the report.

The comprehensive report, Omnichannel and Branch Banking: Getting It Right, shows that U.S. consumers are using more financial institutions, but are more likely to have switched to financial institutions that provide more incentives to expand their relationship, put more of their deposits in the bank, and engage more digitally and at the branch to improve their financial health.  The survey data reported identifies trends in consumers’ methods of communicating with their bank and frequency of contact, impact of branch closings, frustrations with delays or cross-platform issues, and interest in mobile-based personalization in the branch. The report discusses opportunities for cross-selling and opportunities for improving the banking customers’ omnichannel experience. It is available by subscription only.

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