Banks use relationship-based services to attract and retain customers in these times of higher interest rates. SunTec Business Solutions President Amit Dua said if these services are correctly deployed, they benefit both the bank and the customer.

Sometimes, banks launch campaigns offering high deposit rates in their search for new customers. If that is the extent of their strategy, they’ll make less, especially if other banks match those rates.

Digging deeper, they know that when rates go up, so do delinquencies. There is more risk right now. If left alone, that higher-rate tactic often attracts low-value customers who don’t increase their deposits or transact in high amounts.

Building relationships through service bundling

A better play is to bundle products and services together. If the customer achieves every benchmark, they get the rate. Better yet, offer them more products and services based on their activity.

“A qualifier like this allows the bank to offer higher deposit rates only for those 10 or 20% of customers who typically comply with those qualifiers,” Dua explained. “Those banks have done their business value calculation of that customer and are happy to pay out the extra deposit rate to those customers qualifying for this condition.”

A valuable proposition, provided you have the technology to make it happen. The bank must have a system that tracks the entire relationship with that customer, everything from deposits and spending to payouts. The system executes the whole process.

Many leave-alone core systems cannot perform such tasks. Dua said SunTec is working with more banks in this higher-rate era to build value-based engagement systems. His bank customers want to ensure that every offer they provide is based on historical data, spending and the breadth and width of the customer relationship.

Transparency is key. When customers log into their account (from whichever device they choose) beyond their balance, they should see the fee structure based on their relationship with that bank. The goal is to make adding personalized products and services accessible to their basket. And if they do, they see how those added products and services impact their fees.

How to add value to the customer relationship

Dua questions why a customer should even have to shop around for a mortgage. Upon login, they should see offers at rates better than what non-customers receive. If they opt for home insurance, too, they should automatically know how that affects their rates and fees.

“You made a decision,” Dua said. “You’ve stopped scouring the market for those products. So you benefit from it via a better fee and a lower rate. And the bank has expanded their relationship with you.”

Facilitated by machine learning, this curative ability comes at a crucial time for SMEs. Banks lend less as they worry about delinquencies during higher-rate periods.

“It’s a vicious cycle,” Dua said. “Banks don’t lend easily because they’re worried whether the corporates and SMEs can service those loans. But as a result, these corporates, even the most sophisticated ones, have issues on the visibility into their exact cash positions globally or regionally.”

How bad tech hurts banks

Such banks cannot perform cash forecasting. Add another problem to the list of challenges they face. Better to improve transparency and help ensure accurate invoicing.

“I see this might sound like such a table stake, but it doesn’t happen,” Dua observed. “Often the large corporates receive reams of monthly bills, reams of data, and bills are wrong. As a result, banks are in a defensive wicket, unable to explain those bills. It is a moment of truth. That is when banks’ touchpoints to the customer are wrong, then it spoils the relationship.”

Progressive banks can also help corporations comply with ESG requirements. Perhaps they match deposits with investments in ESG. This is especially attractive where banks cannot pay hard interest to corporate clients. Those clients are happy to use that to offset carbon credits.

Dua said the proper design is crucial in today’s fast-paced environment. Whether developed in-house or through a company like SunTec, the technology must be loosely coupled to keep up with the fast-evolving business models customers are adopting. It’s not rewriting code but rather a recomposition of services catering to different business models and use cases.

“My belief is that any software provider unable to do it will not survive,” Dua said. “If there’s any organization, bank or otherwise, that doesn’t use that sort of technology, we’ll find them lagging behind the marketplace because then you’re forced to write code again and again and again. 

“That’s not possible. You’re running on a treadmill and cannot run that fast. As simple as that.”

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