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Relationship Banking Makes a Comeback

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Relationship Banking Makes a Comeback
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Relationship Banking is a term that has been around since the 80’s. In its first use, it described a holistic level of service that branch personnel could deliver to customers by having the entire bank relationship on their computer screen.

Gone were the days of reviewing daily overdraft reports and making subjective decisions about whose items to return or pay – now a branch manager could use hard data to make those decisions.

The concept was right, but retail bankers became distracted with more pressing matters until Banco Popular introduced its Premia program in 2002. I was fortunate to be part of the team supporting the launch, and coined the term Total Relationship Banking (TRB) at that time while working in the Colloquy consulting group (now Loyalty One).

TRB has at its core the use of a common rewards currency (points) awarded to customers to recognize their acquisition and use of any retail banking product including credit cards, debit cards, checking accounts, loans, and investment products.

TRB has become a commonly used industry acronym and once Citi launched its ThankYou! program in 2004, the buzz was that TRB would take retail banking by storm. Instead of a tidal wave, we saw just a ripple or two hitting shore as National City launched its Points program in 2006 followed by ….. nothing.

Nothing that is, until Regions Bank, the 22nd largest US Bank with $137 Billion in assets, launched Relationship Rewards during this past summer. Now we have banks ranking #3 (Citi), #12 (PNC), and #22 sporting a TRB model to increase customer loyalty and retention. As a footnote, PNC acquired National City during the past 2 years and morphed Nat City Points into their own branded currency. It says something about the value of the program that it was not shelved during the course of PNC’s takeover of National City.

One of the outcomes of the recent financial downturn has been increased focus in retail bank marketing on building relationships, encouraging financial literacy skills, and introducing or re-shaping loan and deposit products. The emphasis has been on transparency and value and consumers are responding.

Relationship Banking is a complex model to structure and manage and there is mixed research on whether consumers really want to put the majority of their eggs in one basket, regardless of how many points they can earn.

I’m going to take a closer look at the Regions Bank program this week and also summarize the opportunities and challenges with TRB over the next few posts.

If you’re not a banker, don’t worry, I have a juicy Foursquare post ready to go!

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