Banking · June 26, 2020

The Value of Moving Toward a Relationship Banking Mode

As a business owner, you know the value of having a good relationship with your customers. It's not always about pure transactions but instead the trust and loyalty you build. After all, that's what keeps customers coming back.

The same should hold true with your bank. Your bank can offer far more than business loans and checking accounts. Having a more personal relationship with your bank can benefit your business in the long run.


What is relationship banking?

Relationship banking is a concept that moves beyond transactional banking and into something more. It's when a bank really gets to know their business customers—including their needs and concerns—and works together to come up with solutions and services that make financial sense.

Relationship banking succeeds when it focuses on the individual. When you work with a bank that has this kind of culture, it's like having your own private banker dedicated to your business.

Having a banker in your corner ready to help navigate your financial needs means something. When you feel confident that your bank is dependable, trustworthy and prepared to proactively help your business, it can give you peace of mind that you've found the right partner.

Relationship banking versus transactional banking

At the opposite end of the spectrum, transactional banking focuses on services offered to customers, including business checking and savings accounts, and getting them to use as many as possible.

Both types of banking hope to create efficiencies that improve customers' lives. You might see that in the form of online banking and apps. But where transactional banking provides these tools, sets you up with services and leaves you to figure out the rest, relationship banking proactively helps you get the most out of these offerings.

As your business grows, you might need loans or other financial tools to function. Having a bank that understands your business and is willing to offer more flexibility can provide a massive boost during critical times. That's the benefit of relationship banking. Your banker becomes a financial strategist who can tailor packages of products and services to your needs, provide flexible rates and credit approvals, and help you meet your business objectives.

Because transactional banks rely on online forms or complex algorithms to provide hard answers on loans or other applications, they don't always offer that type of flexibility. For some customers, that can hamper the long-term potential of your business.

Assess your banking needs

As a customer, the differences between these two types of banking can be significant, especially if you know you have specific banking needs.

For many business owners, this is the dilemma in choosing a bank that focuses on relationship banking versus transactional banking. However, it doesn't always have to be an all-or-nothing choice. If you're currently working with a bank that feels more transactional, you can make an effort to get to know your banker. Schedule a time to meet with them in person. Let them know about your business and some of your needs. It could be enough to start moving the relationship to something more personal.

If you don't feel your bank is meeting your needs and concerns, it may be time to look for an institution that embraces relationship banking. While it might feel overwhelming to switch financial institutions, remember that this is ultimately a business decision. You need to make the best possible moves to help your business thrive, now and into the future.

Personalized service is becoming the standard. Now that you have a better understanding of relationship banking, you might find it's a better option for your needs. Be on the lookout for a bank that focuses on relationship banking and wants to create those personalized relationships to meet your needs.

Insights

Financial insights for your business

No results found

Links to third-party websites may have a privacy policy different from First Citizens Bank and may provide less security than this website. First Citizens Bank and its affiliates are not responsible for the products, services and content on any third-party website.

This information is provided for educational purposes only and should not be relied on or interpreted as accounting, financial planning, investment, legal or tax advice. First Citizens Bank (or its affiliates) neither endorses nor guarantees this information, and encourages you to consult a professional for advice applicable to your specific situation.