An important relationship for any financial institution is their primary banking relationship with consumers, who tend to consolidate all their finances with one institution and forge lasting ties through this method of banking. Doing business with primary banks increases consumer retention.
Raddon reports that megabanks are losing market share as primary checking accounts with Gen Z and Millennial consumers, while community banks and credit unions have gained ground due to their digital experience being key in winning them over.
Authorized Users
Becoming an authorized user or co-signer on another person's credit card account can help your score, provided it's reported to credit bureaus and used responsibly. This means the primary account holder should make on time payments and limit credit utilization to avoid penalties from creditors.
If a primary account holder fails to maintain this rule, their credit may suffer and disagreements could quickly ensue if their spending habits result in financial strain for others.
Credit issuers frequently impose age restrictions for authorized users of an account, with restrictions ranging from 13-18 based on how the account is managed. American Express requires at least 13 year-olds while Discover and U.S. Bank require them be 16 or 17 year-olds. It's essential that you select someone you trust as an authorized user - any misuse could place undue strain on relationships - should debt accumulate or funds spent cannot be reimbursed back quickly enough.
Joint Accounts
A joint account provides two people equal ownership and access to funds in an account. It can be used by couples, business partners or parents and their children - it can even make managing household bills simpler! A common reason for creating one of these bank accounts is making paying household bills simpler or managing shared expenses more easily.
Typically, both account holders are jointly liable for charges made to their joint account; however, the person who opened it is known as the primary account holder. If one party becomes severely indebted, creditors can seize shared assets such as accounts.
Many banks provide both online and in-person options for opening joint accounts. Apps like Nova, Lumio and Emma can assist in tracking spending within such accounts. Communication is key in any relationship; keeping an open dialogue regarding finances can prevent conflict while giving account holders full visibility into how your money is doing.
Payment Channels
Payment channels are the means by which people make purchases of goods and services. They include online card payments, ACH transfers and bank debits as well as buy now, pay later payment methods like Afterpay and Klarna that resonate with consumers living in today's fast-paced environment that requires banks to explore innovative customer-centric opportunities.
Process of Completing Payment Channel Transactions Vary by Method, yet all follow similar basic steps. When customers use any payment channel to make purchases, they typically initiate a request that's sent directly to their card issuer for authorization of transaction and confirmation by merchant that payment has taken place successfully. Some payment channels include both an acquirer (which maintains network relationships) and a processor who work together, while other have separate ones - providing more options increases customers using them more frequently.
Customer Service
Today's customers want to feel valued and understood; outstanding customer service can help your institution create this experience and build loyalty. Make sure your staff understands all products and services your institution provides so they can respond appropriately when customers ask any questions, such as moving between channels such as home equity loans to personal loans (e.g. applying online versus over the phone).
Many consumers prefer consolidating their finances in one location whenever possible, leading them to place all their financial affairs with one institution whenever possible. A primary financial institution can therefore command high levels of loyalty, retention and engagement from consumers - as shown by Raddon research showing six large banks hold more than 59% share for checking account households while 24% and 16% respectively belong to credit unions and community banks respectively. To increase your chances of retaining primary status for longer, devise a customer retention and acquisition strategy designed to increase retention rate among existing customers as well as create relationships.
