The Importance of knowing who you bank with, and for them to know you
Think of your best friend. You probably have a smile on your face because you are thinking of someone who you can trust, someone who is there for you when you really need them, someone that you have a great relationship with. When it comes to your future and your money, this is the way you should feel and think about your bank. Like your bank is your new BFF.
So, what is your new BFF trying to get out of relationship banking with you?
To a bank, relationship banking means making financial plans or packages available to customers, in lieu of focusing on opening or selling a one-off account or loan, with the intent of gaining customer loyalty and retention i.e. “friendship”.
Don’t forget, relationship banking is a two-way street! What should you be getting from your banking BFF?
To a customer, relationship banking is the art of creating a flexible financial strategy. The key word here is flexible, and that flexibility is gained through building a relationship and trust with your financial institution.
In today’s world, there are many options offered to consumers when it comes to promotions, loans, accounts and credit. At face value, it would seem like this is what is meant by flexibility. But, to take advantage of every money saving deal would mean having accounts with different financial institutions and no loyalty to one.
Here are some great reasons to give your time and love to one bank, your BFF:
Reduced or eliminated fees
From the bank’s perspective, when you have multiple accounts open, you are considered valuable. As a thank you for your loyalty and to acknowledge your value, banks will often waive fees and/or minimum balance requirements to help you secure the right accounts for your financial needs. In addition, you may be able to upgrade your accounts when you have multiple accounts open, and many upgraded checking and/or savings accounts come with benefits to help you save money on your day to day banking needs. According to Chris Sarver, Branch Manager at National Bank of Arizona®, this is “relationship pricing” and helps to strengthen the relationship between a customer and a bank with a win-win situation. For some banks, relationship pricing may also extend to loan products as well.
Invested time in planning your future
In any relationship, the more time you spend with someone, the more understanding they have of you, your needs and your life. This is the same when developing a relationship with your bank. In this instance, your banker should know what plans you have for your financial future and can take a look at your relationship with the bank to help you with these plans by finding opportunities to enhance and develop your financial footing. Your banker can recommend new accounts or lines of credit that fit you and your goals. Sarver reaffirmed that it is easier to advise someone when they have a standing relationship with a banker because that banker knows their client’s dreams, goals and values. This allows the banker to treat that client like a friend and look out for their best interest, rather than treating the client like a number or sales goal. A good banker can anticipate your financial needs.
Customer service and convenience
If a stranger came up to you and asked you for a favor, you respond with hesitation because you don’t know them. Conversely, if your best friend asks you for a favor, you wouldn’t bat an eye. You’d probably drive an hour out of your way just to help your best friend. The same is true with tellers, bankers and the bank in general. If you have a good relationship with your bank, they know you and are willing to go out of their way for you. Sarver gave a perfect example of this with a story about a customer; let’s call him Bill. Bill gets cashier’s checks on a weekly basis for his business needs. The tellers and bankers know Bill well, so when Bill calls the bank and says, “I need a favor. Can you print a check for me so that I can just pick it up without having to wait? I am in a rush.” The response is, “Sure Bill, see you in a few.” Would this happen for a stranger who hadn’t built a relationship with the bank? Probably not. Just another perk of having a bank as your BFF.
Better interest rates
In any friendship, there is a mutual desire to help one another get ahead, which is why it is good to have friends in high places. Your relationship with your bank or banker can work the same way and lead to some serious perks. One of these perks is known as a “relationship discounts.” Sarver mentioned that banks like to reward customers for their loyalty by offering specialty interest rates, which can save you money in the long run. While these rates vary based on many different factors, the odds of you being able to secure the best rate possible significantly increase if you have a good relationship with your banker. Your banker can also find ways to save you money by linking multiple products and setting up auto payments that generally result in waived fees or discounted rates.
One of the best things about a best friend is knowing you always have someone in your corner to vouch for you no matter what. Your banker can act as this advocate when it comes to securing loans. Whether it is a personal, business, auto or even a boat loan, your banker can help to expedite the process of securing the funding you’ve applied for because they know your history and can attest to your character. This definitely helps you achieve your business and personal goals faster. Sarver pointed out that banks need to protect assets, so when they receive a loan application from someone without an existing bank relationship that bank will generally spend more time scrutinizing that application. This process of examination into the applicant’s credit history can postpone the approval of a loan significantly, whereas someone that has a preexisting relationship with the bank may experience a quicker application process.
The bottom line is, like anything in life, you get what you give and you get what you pay for. If you are willing to make your bank your BFF and build that relationship of trust, versus trying to find the best deal one account at a time, then you get a financial partner that will have your back, like a best friend.
Side note – Another advantage that you get from having a relationship with a banker is all of their contacts and relationships. Your local banker wants to be your primary point of contact for all your financial needs, even if it is something they can’t specifically help with. Let’s say you need to find a new person to do your taxes, or need a new insurance agent, your banker is a great resource to make introductions to trusted professionals. Not to mention the different connections your banker can provide to help you grow your business because if you succeed, the banker succeeds.