Today, I met one of my college friends after about 14 years. During the conversation, he shared his experience with various banks in the last 14 years and why his bank made him take additional products/services from the competition.
My friend started his career in a manufacturing company and his employer opened his savings account (salary savings account) with a Multinational Private Sector Bank – Bank A (intentionally no bank names are being given out). He had good growth in initial years and within 2 years he moved job to another company. His new employer opened his account with another private sector bank – Bank B.
My friend says “Bank A charged me for Branch visits and expected me to only talk to machines, RIDICULOUS. No personal contact was established in 2 years. As such, I did not build any bonding with the bank and I happily migrated all balances and relationship to Bank B.”
His career was going good and so was his balance in bank B. He was upgraded from Normal Segment to Preferred Segment by Bank B. He decided to start investing in equities and approached the Bank B to open a trading account. His Relationship Manager (RM) offered him standard rack rates (brokerage rate of 0.35%) as against other Financial Institutions offering brokerage charges of 0.25% considering his future potential.
My friend says “Bank B’s Trading arm was bothered of the volume of trading and brokerage commitment I would give notwithstanding my overall relationship with the Group. The Trading arm and the Bank saw me as two separate customers rather than one customer of the Group Entity”.
My friend decided to open trading account with Financial Institution and not the Bank’s Trading Subsidiary. Bank B just lost one of the important stickiness and continuous revenue generating relationship. The only grace for the Bank B was my friend interlinked his trading account with the saving account in Bank B. With vintage, Bank B issued him a Credit Card. The Credit Card and interlinking of trading account led to some sort of stickiness with Bank B.
As a typical salaried person, after 3 years with current employer he changed the job. He moved to senior post at another company and once again a new salary account got opened and this time it was with Bank C. The bank offered him Preferred Relationship.
I asked him whether he switched his banking relationships to the new bank. My friend responded “No. For initial year and half I routed all transactions with Bank B as my trading account was linked with that Bank. Instead, I set up a Standing Instruction to transfer my balance from Bank C to Bank B on the very day I received salary credit” This shows that the stickiness helped Bank B retain him but it was not strong enough to retain him forever.
Fortunately for Bank C they assigned a new smart RM to manage his relationship. The RM seems to have properly analyzed his account behaviour and met him to understand his requirements. The RM pushed his way across departments – Trading & Investments Dept, Credit Card and Overdraft Services to get necessary rate approvals and waivers.
My friend says – “After few days of meeting me, the newly appointed RM came with all documents prepared. He provided me a bouquet of right offers – Trading Account, Credit Card, Overdraft facility on Fixed Deposits. He also carried the necessary Identify Proof I had already submitted rather than asking me for it again. I was simply bowled and could not resist signing on the dotted lines.
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To add he says “In past I met all sorts of RMs who called me for formality sake but no one ever followed up on my requirements. But this RM was really different”
With a purely Customer Centric approach and RM’s genuine effort, Bank C got the relationship which was otherwise being serviced by Bank B and FI. Bank C now became his Primary Bank. The relationship was further strengthened by Term Insurance cross-sell. My friend’s overall relationship with Bank was still growing and they up-migrated him from Wealth to Privee.
Now let’s see how Bank C goofed up overtime to lose some of his banking relationship. By now he had about 9 years of professional career and he had decided to buy a house. He approached the Bank C for Home Loans. No wonder my friend had exceptionally good Credit Bureau Score and all banks would have been willing to offer him loans. Bank C offered him a rate of 10.25% which was 25 bps (0.25%) higher than what was published interest rate of competing bank. He requested his RM to convince the Home Loans department to offer loan at rate given by competition. This time around the Home Loans department of Bank C did not budge.
My friend says – “The bank could not value the emotions attached by me to buying a new House. Nor could they value my last 4 years of relationship with them. If 25 bps is important to a bank then it is much more important for me as an individual. My RM was left helpless and I unwillingly decided to go ahead with other bank (Bank D)”
One fine month my friend failed to pay his credit card dues on time and he was charged with Interest Charge and Late Payment Fee. He requested Bank C for waiver on late payment fee and was okay to pay the interest charges. Unfortunately the Credit Card Department of Bank C turned down this request. My friend says he wrote a brief email to bank –
“It was pleasure using your Credit Card services for last 2 years. I am unhappy about your decision to not waive the late payment fee. I have paid up all my dues on the Credit Card and have decided to not use your bank’s card in future. Kindly block / close my credit card account. Thanks.”
I feel many banks fail to realize that requests for waiver, charge reversals, matching rates as given by competition are all opportunities to initiate interesting conversations with customer. The loyal customer would demand it; he wants him to be heard. His genuine intent is to have all relationship with one bank. But when things don’t proceed as per the customer’s fair expectation he simply begins a new relationship with other bank.
My friend says that over time he decided to take up Credit Cards from Bank D & E and Car Loans from Bank F.
As a banking customer my friend’s opinion is – “Thanks to ECS, SI, NEFT, IMPS, RTGS, Net Banking and Mobile Banking, I am comfortable transacting with multiple banks as transfer of funds is possible within seconds. Today all the banks from A to F and other wants share of my banking and financial relationship. But I have decided to primarily be with the bank which is willing to hear me”
In 14 years of his career, he has had financial relationship with 6 banks one FI. The scene could have been entirely different for Bank A, B, & C if they could have really assessed his life-time value potential and not frittered away the relationship for smaller gains. More he still has at least another 25 years of successful career waiting for him.
Sign-Off Note: Every 2 – 3 years the financial requirements of customers changes and it is important that a Bank handle those unique moments diligently. During those unique moments, the Relationship Manager plays a strong link between a Customer and the Bank. Banks should empower and facilitate their RMs to take decisions on offers, rates, waivers, pricing, etc in the best interest of Customer and Bank, rather than leave the decision completely in hands of specific Product Department. This would help banks build long-lasting relationships and not lose their valuable customers.
If you too have similar experiences with your bank and you too have an active relationship with more than 3 banks then click on the Like button and share this blog with your friends and colleagues.
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