How Value-Driven Relationships Help Future-Proof Your Bank
Originally contributed by Amanda Ervin and Bruce Wedderburn for Bank Director Magazine
Regional and community banks have grappled with challenges and headwinds over the past few years. While recent rate cuts should stimulate stronger loan demand and lower deposit costs, the impact won’t happen immediately and some margin pressure will continue over the short term. Meanwhile, adjustable-rate loans are resetting, which means lenders could see interest earned declining faster than rates paid.
Given how cyclical the banking industry is, we know more obstacles are always on the horizon. Now is an excellent time for leaders to proactively consider new strategies to future-proof their institutions to better navigate market fluctuations going forward. By pivoting towards offering more holistic services and fostering deeper customer relationships, banks can build a strong foundation to withstand ongoing volatility and external factors that are outside their control.
How do you execute on a strategy built on banking relationships? It starts with a committed, skilled team of relationship managers who are focused on creating more value for customers at every step.
Banking Relationships Are Key
Particularly in business banking, bankers need to move away from single-product offerings and instead focus on building complete, value-driven relationships with clients. Developing less-transactional relationships is more profitable and opens the door to more opportunities to comprehensively serve a client’s personal and business needs. It’s the difference between handling a customer’s mortgage and handling their mortgage and deposit, treasury, savings, business loans and cash management needs — then doing the same for their employees.
Community and regional banks are often known as “relationship bankers” because they’re deeply connected to their communities. Now more than ever, that personal connection is a huge asset. Technology provides customers with transactional efficiencies, but they need a skilled relationship manager to deliver a comprehensive, value-driven banking experience. Trust, empathy, curiosity, listening, asking smart questions and offering targeted advice all require the human touch.
Prioritize Talent Development
It’s critical to attract, develop, and retain competent, integrity-driven banking professionals who can deliver personalized advice, build trust and meet clients’ diverse financial needs.
Training and development programs should address key skills related to consultative selling, relationship management and identifying client needs. Skill development, on its own, won’t be enough. While most community bankers have friendly relationships with clients, turning those connections into profitable banking business will require a change in mindset about the nature of their role and purpose. To be effective, training must address and align internal beliefs about what it means to sell and how value is defined.
The bankers who are successful at fostering holistic, mutually beneficial relationships with their clients are those who are driven by a personal desire to create meaningful value from the customer’s point of view. This desire motivates them to truly listen to their client’s needs. It fuels their purpose. These banking professionals aren’t just selling a product to meet a quota; they’re learning about what matters to their clients, uncovering known and unknown problems and providing comprehensive solutions, not products, with the goal of making a tangible difference for their clients and the broader community. Bankers with this kind of mindset inevitably build stronger, more-profitable client relationships, and they tend to enjoy their jobs a lot more as well.
These developmental strategies also play an important role as banks look to diversify revenue streams. More employees are being asked to expand their roles and prospect for new business — that’s no easy task. Training must build the mindset, confidence and conversational selling skills to create larger more comprehensive solutions for clients.
Future-Proofing Your Bank: Action Steps
Foster deeper, holistic relationships with clients to gather more deposits, cross-sell products and provide value-added services.
- Leverage digital capabilities for efficiency while maintaining a human touch through skilled relationship managers.
- Invest in employee development that instills a value-focused mindset and enhances skills in consultative selling, relationship management and identifying client needs.
- Prioritize company culture, career development opportunities, leadership, coaching, compensation and incentives to attract and retain top talent.
- Continuously evaluate and adapt banking strategies to navigate the cyclical nature of the industry and position the bank for long-term success.
By developing holistic banking relationships and confident professionals with the skills and commitment to provide an exceptional human-centered experience for their clients, your bank will be prepared to thrive regardless of external factors and market fluctuations.
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