Relationship banking in a client-centric context

English: Banks place more emphasis on building mutually beneficial relationships with their clients in order to capitalise on cross-selling opportunities that improve profitability. By collecting information, they are able to identify the needs of their clients and build a relationship that is mutually beneficial. This relationship is between the contact personnel and clients and occurs through multiple interactions in the branches over a period of time. This study focuses on this bank-client relationship in five locations where three of the Big Four South African retail banks are situated. Data was collected from both clients and contact-personnel in branches in Bloemfontein, Bethlehem, Kimberley, Kroonstad, and Welkom. This was done in order to compare the perceptions of clients with those of the contact-personnel who the clients interact with in the branch. Six constructs are identified that reflect various stages or aspects of the retail bank client relationship. These are bank selection criteria, service quality, client satisfaction, client loyalty, the nature of the relationship, and aspects of client centricity. The findings reveal that the most important bank selection criteria for clients to choose a bank for the first time relates to their perceptions of service quality, image and reputation of the bank. Furthermore, using an adapted SERVPERF questionnaire, service quality is found to be an essential determinant of client satisfaction, with only the empathy dimension reflecting no statistical significance in the perceptions of clients and contact-personnel. There is therefore a statistically significant difference between the perceptions of clients and contact personnel for all the remaining dimensions of service quality. Clients are also more satisfied and loyal to their main bank than what contact-personnel perceive them to be and contact-personnel feel that they are in general empowered to achieve the client-centric objectives of the bank. Contact-personnel feel that support from management and up-to-date information on clients through effective technology is essential, and in some cases, however, contact-personnel indicated that line management was not always supportive of the day-to-day functions of contact- personnel. Smaller branches in more rural-based areas in particular found this to be the case. A structural equation model (SEM) was used to test whether a relationship exists between the relationship dimension of service quality, client satisfaction, and client loyalty. The findings indicate that if the contact-personnel within a branch are accessible, offer sound advice, communicate effectively, and are able to make speedy decisions, client satisfaction and loyalty is improved. Further to this, the SEM found that if client satisfaction and loyalty increases, clients are less likely to consider switching to another bank. Therefore, building mutually beneficial bank-client relationships causes client satisfaction and loyalty and also reduces the likelihood that clients will switch to another bank. This holds important implications for management of the Big Four banks as it confirms that their current strategy of building relationships in a client-centric context does improve client satisfaction and loyalty. Several studies have found that if loyalty improves, profitability concomitantly improves and due to banks being privy to client information based on their fundamental role as an intermediary, they can capitalise by cross-selling additional bank products and services to clients and increase the revenue generated from each respective client. Therefore, because a client-centric approach facilitates an approach whereby the needs of clients are addressed, banks must ensure that they pursue a strategy that is proactive in nature as this will attract profitable clients. This strategy is further supported by the findings that client perceptions of service quality are important throughout the relationship. Indeed, service quality is an important antecedent to selecting a bank for the first time, and is also a major reason for clients to stay at their main banks for over twenty years.