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10-22-2024

Strategies for Banks to Engage with and Commercialise Non-Relationship Managed Businesses

 

In conversation with Nick Reid

One of the primary challenges banks face is the lack of resources to manage relationships with every business. In fact, according to Small Business Britain, 73% of UK businesses do not have a relationship manager from their bank.

This means a large portion of businesses have a digital-only banking relationship.   For banks, this can result in deposit leakage and loss of wallet share of a business' financial products, they are simply less visible and run the risk of losing relationship primacy. Worse still they run the risk of losing businesses and their deposits altogether.  

 
Q: How does the lack of relationship management impact banks and their Business customers?

Many banks have scaled back the level of human contact they provide to businesses. This is very understandable - not because they want to reduce support available to businesses but because the cost to serve businesses can be high, not to mention the onerous regulatory environment in which banks operate. The problem businesses (and banks) have, is that reduced human interaction has reduced business' relationships with their bank (and its digital channels) to a very transactional one.

This presents challenges with customer and deposit attrition. If levels of human (and digital) engagement with businesses are low, businesses may be less likely to turn to them in the moments that matter, which can be a material financial decision such as borrowing.

Q: How can engaging with non-relationship managed businesses unlock revenue opportunities for banks?

An Engagement Banking approach has several benefits. A combination of digital data and human interaction is fundamental to truly understanding business customers, which in turn allows banks to better serve them and shape future business banking propositions around what businesses actually want. Getting these kinds of qualitative insights to complement quantitative insights are impossible in a digital-only relationship. 

For businesses, an Engagement Banking approach means they receive the personalised support they need, whilst it enables banks to better understand this 'hard to service segment'.

Not only that, but being more visible in the eyes of a business means banks (re)establish relationship primacy with businesses. This hybrid physical and digital approach is also becoming known as 'phygital'.  

Q: What benefits can banks gain from partnering with providers like BankiFi

Partnering with Engagement Banking providers like BankiFi offers banks a unique opportunity to enhance their service offerings for non-relationship managed businesses. These partnerships can help banks implement human interactions where they currently rely solely on digital touch-points.

Moreover, an Engagement Banking approach can provide banks with valuable real-time data insights, enabling banks to tailor their services to meet the specific needs of this underserved segment. Ultimately, this can lead to stronger relationships, increased customer loyalty, and new revenue opportunities for banks.

Q: What is the key takeaway for banks looking to improve their engagement with businesses?

The key takeaway is that banks need to re-evaluate their approach to non-relationship managed businesses.

By recognising the gap in service and exploring partnerships, banks can unlock new opportunities to serve this segment better, maintain or regain relationship primacy, and tap into a wealth of potential revenue.


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