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What Is Relationship Banking?
Choosing one bank to handle all of your financial needs can offer unique benefits if your bank practices relationship banking. Relationship banking is a strategy banks use to attract and retain customers by providing a wide range of products to meet their financial needs. Here, we explain what relationship banking is, how it can benefit you, and its pros and cons.
Understanding Relationship Banking
Relationship banking involves a bank offering a comprehensive portfolio of products and personalized services to loyal customers who maintain multiple accounts. As a relationship banking customer, you collaborate with relationship managers to select products that align with your goals. You may also receive rewards for maintaining high account balances with the bank.
For instance, having a total of $50,000 in your checking and savings accounts could unlock benefits such as one-on-one financial planning, discounted bank fees, higher annual percentage yields (APYs) on savings accounts, and lower annual percentage rates (APRs) on loans.
Banks may offer the following products to promote relationship banking:
- Checking accounts
- Savings accounts
- Investment accounts
- Credit cards
- Mortgages
- Auto loans
- Personal loans
- Life insurance
How Relationship Banking Can Benefit You
Becoming a loyal customer of a bank can be convenient. Within one desktop or app account dashboard, you might be able to check your savings, credit card, and loan balances; autopay schedules and amounts; and more. In addition to relationship discounts, having a large balance at a bank could make you eligible for a personalized banking experience with financial advising.
For example, PNC offers a relationship banking service called PNC Choice Banking, which provides customers with relationship managers, lower interest rates on credit cards, and the option to work with the PNC investment team on strategies to reach long-term goals. PNC Choice Banking is free to customers with $50,000 in deposit balances at the bank.
Similarly, Citi offers relationship mortgage rate discounts to current and new customers who open up and maintain a certain deposit account balance. If you have an account with $1 to $50,000, you could get $500 off mortgage closing fees. And if you have $50,000 or more in an account, you could qualify for a percentage off your mortgage interest rate.
Business owners may also benefit from relationship banking because it could allow you to handle all personal and business banking tasks with one bank visit. The bank might even connect you with client services representatives to help you reach your business goals.
Pros and Cons of Relationship Banking
Not sure if relationship banking is right for you? Here are the pros and cons.
Pros of Relationship Banking
- Provides exclusive services: Banks may offer high-net-worth customers benefits like financial advising, concierge services, or access to a wealth manager.
- Makes account management easy: Having your cash and loans at one bank can make paying bills and managing your bank balance convenient.
- Offers financial incentives: Banks may offer discounts on bank fees, higher returns on savings, and lower interest rates on loans for loyal bank customers.
Cons of Relationship Banking
- Limits your options: The bank you’re loyal to might not always offer the best APYs on bank accounts or APRs on loans, so it’s still always a good idea to keep your options open and periodically compare what else is out there.
- Perks may require high balances: You might need to have a large sum in your accounts to qualify for valuable relationship banking incentives.
- Not offered by all banks: Relationship banking isn’t a service offered by all financial institutions, so you’ll have to shop around and find one that offers products and benefits that meet your needs.
The Bottom Line
In a world where self-service has become the new norm, relationship banking may offer a more personalized banking experience where you can get one-on-one support along with better terms on products. However, even if you’re loyal to a bank, shopping around and comparing services every so often is still worthwhile. After all, your bank should work for you—and checking out competitors could help you make sure your money is in the right place.
For any mortgage service needs, call O1ne Mortgage at 213-732-3074. We are here to provide you with the best financial solutions tailored to your needs.
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