Every financial services institution strives to meet consumers’ needs, but these efforts are fraught with inefficiencies and failures resulting from manual workarounds. Those that do achieve it use relationship banking strategies to complete a single point of service while bundling various products and services.
Relationship banking is the concept of delivering a personalized bundle of products. This helps consumers meet their unique financial goals while working to achieve bank objectives, such as raising deposits to help comply with FDIC liquidity requirements. Financial institutions work to provide personalized banking, but struggle when executing and complying with the conditional logic of such a task. Understanding their consumers’ particular situations and goals helps the bank come up with new and creative financial instruments, benefiting both the bank and the consumer in the long run.
Continue reading to learn how to enhance your relationship banking strategy as you modernize and transform your core banking and legacy systems, enabling financial institutions to offer a flexible, consumer-focused approach to bundling products.
Key considerations for enhancing your relationship banking strategy by leveraging personalized multi-product offerings
Today’s financial services institutions are facing new demands from consumers regarding financial packages and offerings. In fact, 45% of banking consumers say they want to put all their eggs in one financial basket, according to PYMNTS. Bank consumers want to know that their concerns are being heard and their goals are recognized. These consumers are looking for individualized financial packages with various products to be personalized and presented to them.
To deliver this type of banking to consumers, financial services institutions must boost their relationship banking strategy by ensuring they can give consumers all the products they need in one place. Relationship banking — also referred to as product bundling — is built for the individual consumer. That means financial institutions need to give every consumer the care and attention necessary to make them feel unique, understood and valued.
Banks can accomplish this by considering the following:
- Recognize your consumers’ unique needs: Understanding where your consumer is on their banking journey can help you make offers that solve their specific problems and help them meet their financial goals. No two consumers are the same, so it’s vital that you extend products and services that get to the heart of your consumer’s needs.
- Raising appropriate deposit amounts to comply with the Dodd-Frank Act: Without the appropriate liquidity ratios, banks are unable to do what they were designed to do: help a consumer achieve their financial goals, solvently. When a financial services institution has the proper amount of money built up, consumers can always access necessary funds and be protected from risky bank practices.
- Leveraging technology and straight-through processing (STP): Get full integration from end-to-end with STP. While traditional bank processing requires reentering and reloading data, your bank can build an offer, send it to the consumer, and enroll them in the offer without additional data entry using STP.
- Observing regulation transparency with disclosures: It’s absolutely necessary that you send new multi-product bundled offerings to consumers knowing that your institution is in compliance with any laws or regulations put in place by the Consumer Finance Protection Bureau and the FDIC. This will ensure your bank is safe from regulatory fines and will protect your consumers.
The value of monitoring performance
Feedback is part of any relationship, and this is no exception for the connection between institutions and their consumers. Pay attention to what your consumers are saying about their personal financial objectives and make adjustments to their services when needed. This ensures your consumer isn’t forgotten and can help determine if you’re successfully serving your consumers.
It’s also important to monitor the performance of your offers outside of just consumer responses. There are a few different factors that your institution should be constantly looking at to track success:
If a financial services institution doesn’t have enough money to cover regulatory requirements in liquidity designed to protect the consumer, like cash withdrawals or loans, then the company will be in a position of serious regulatory oversight, resulting in bank closure and the sale of bank assets. It’s vital that you track how many deposits are made to ensure your bank fidelity and fiscal viability.
A successful bank must be in compliance with all regulatory requirements issued by regulatory bodies such as the SEC, OCC, FDIC, CFPB, and The Fed. Assure your consumers are safe through transparent, consistent and well-documented disclosures designed to educate and inform. Having disclosures centrally managed and closely associated with the product or relationship banking bundle not only mitigates human error, but provides effective and efficient consumer transparency.
Net new consumer accounts
Although it’s essential to keep an eye on new accounts gained by your institution, a successful bank constantly looks at the next best product offer to retain accounts and increase consumer loyalty. If you’re not delivering a beneficial bundle of products to help consumers succeed, then your competition will.
Increasing wallet share
Consumer retention in banking is vital for success, and one of the best ways to keep a consumer engaged is to personalize their experience. While a consumer opening a savings account at your institution is definitely a good step, a bank should have a strategy to increase wallet share by offering additional products and services that match their lifestyle and demand.
To increase wallet share, ask yourself these questions:
- What is the next best product for your consumers?
- What is the next best price to offer consumers based on their current product packages?
- What is the right package and timing to achieve optimal success for a win – win strategy between bank and consumer?
- How to incentivise consumers to consider new services by creating offers that will fit their unique financial situations?
- How do you put this into a strategy that can be measured and accounted for?
How Naehas can help streamline a multi-product offering on a relationship basis
Up until now, offering multiple products has been virtually unachievable. But now there’s Naehas. Naehas delivers personalized products, offers, disclosures, and consumer experiences with a relationship banking bundle. This one multi-product package integrates, monitors, conditions, and straight through processes. This is accomplished by integrating multiple backend cores and blending the products together, conditionalizing them with model rules and workflows to span across the enterprise.
Naehas’ platform helps institutions accelerate the product release sequence from months to days and automates the product lifecycle through integration of disparate core systems that eliminate manual entry and solve for STP. It ensures all new relationship banking bundles are compliant through audit and tracking workflow and leveraging Naehas’s enterprise disclosure CMS. This mitigates bank risk while ensuring a thoughtful and transparent disclosure strategy.
Naehas offers AI-driven and consumer-focused technology that helps financial institutions build their relationship banking strategy.
Naehas solutions modernize the core by offering:
- Integration through industry standard APIs (such as BIAN) and configurable support for any data format.
- SaaS technology that promotes compliance through audited and tracked controls.
- A sandbox environment where product managers can test products and bundling strategies to see how they work against activity-based costing and timed goals.
- Technology and services that utilize historical data, current market understanding and AI-acquired consumer needs designed to promote consumer and FI success.
- Thoughtfully achieved technology partnerships that promote AI decision-making and repeat integration for efficiency.
Naehas can streamline your relationship banking strategy
Relationship banking has always been the way forward when it comes to building rich consumer relationships, and with Naehas, it’s a systematic reality. Improving retention, increasing wallet share, achieving the optimal deposits for liquidity reserves, and making consumers successful is what modernizing the bank is all about. Naehas helps model, implement, execute, disclose, and fulfill a bank’s consumer strategy. Mitigate and control risk and deliver personalized product packages through disclosure management and offer management solutions.
Want to learn more about relationship banking and what Naehas can do for your company? Talk with an expert today.