Banking Customers with Business and Personal Relationships

Data from the 2014 J.D. Power Small Business Banking Satisfaction Study finds that approximately one-third of small business banking customers also have a personal relationship with their primary business banking institution.

These types of ‘cross-functional’ relationships are beneficial for financial institutions. First and foremost, the institution is holding a greater overall ‘share-of-wallet’. Additionally, business banking customers with a personal account report significantly higher satisfaction, loyalty and advocacy metrics (compared to business customers who do NOT also have a personal relationship). However, analysis of study data finds that some banks are struggling to maximize the full ROI of a cross-functional relationship.

For example, as illustrated in the chart below, Bank A is currently not receiving the same positive ‘lift’ when their small business customers also hold personal banking accounts.

TD Bank SBB_v1

Additionally, study data finds that the ability for Bank A to cross-sell their small business customers on personal accounts is lagging peers.

TD Bank SBB_v1_2

There are many potential reasons why a small business owner is unwilling to hold personal accounts with their business banking institution, including but not limited to:

  • Business institution may not be located near the customers home
  • The customer has a long-standing relationship with their personal institution and is currently satisfied
  • ‘Conflict of interest’ – some customers just want to separate their accounts

Regardless of the reason, the ability for the financial institution to provide excellent service and build trustworthy relationships is vital towards the goal of cross-selling business banking customers on personal accounts.

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