Transactional vs. Relational Relationships in Banking

April 24, 2024   -  

Customer loyalty is the key to long-lasting success in the world of banking, and it’s not hard to see why. When you have a sizable customer base that trusts your financial institution, you can rest assured knowing the future is bright for your bank.

However, customer loyalty in this industry is currently on the decline. Due to reduced quality standards for customer experiences, customer retention for multichannel banks fell to 76% in 2023 (compared to 78% the previous year). Meanwhile, Millennials are two to three times more likely than people in earlier generations to switch banks.

To overcome these trends, you’ll need to think about how your financial institution interacts with its customers. By weighing the benefits of transactional vs. relational relationships and finding the right approach for your needs, you can still gain the trust of people doing business with your bank.

Transactional vs. Relational Relationships: Understanding the Differences

As a first step, you’ll need to understand exactly what separates transactional relationships from relational relationships. With that in mind, here’s what you should know about:

Transactional Relationships

Transactional relationships are all about maximizing efficiency and profit margins. In pursuit of these goals, banks that prioritize transactional relationships offer a standardized lineup of products and minimal customization options. Though this approach can help financial institutions in some ways, it can also prevent customers from developing genuine connections to their banks.

On the flipside, clients can also take a transactional approach to their relationships with banks, and that could lead to unexpected trouble for your financial institution. Today, 73% of all customers get banking services from one or two banks—and 20% do business with three or four banks. By rethinking how your bank handles its customer relationships, you can increase client loyalty and make your bank a true one-stop shop for the services your customers need.

Relational Relationships

Relational relationships are the polar opposite of transactional relationships—banks focusing on this relationship style are trying to foster meaningful connections with customers instead of simply trying to maximize revenue. These strategies have an impact on every aspect of your financial institution, from what services it offers to how your employees talk to clients one-on-one.

According to 49% of survey respondents, trust played a more prominent role than any other factor in their search for a bank. Since connecting with clients emotionally is more important now than ever before, prioritizing relational relationships can be extremely helpful for your financial institution.

How to Build Lasting Customer Relationships

Planning to pursue relational relationships with your customers is easier than actually building these connections. Fortunately, having a plan in place can go a long way toward making your new strategy a success.

To deliver the best possible customer experience, your bank should offer:

  • Powerful digital banking options. Online banking may not be as personal as visiting a branch in person, but almost 75% of bank customers prefer to use a mobile app or a website to handle this task. And if your website and apps are easy to use and help customers take care of everything they need to do, your brand can actually begin to feel friendly and familiar in the same way an in-person visit might. 
  • Comfortable branches. On the other hand, 25.5% of customers prefer in-person banking to any other option. To make customers feel at home while visiting one of your bank’s branches, provide a warm, welcoming environment and exceptional customer service.
  • Community events and useful resources. While financial literacy is a crucial skill, 25% of people in the US don’t have anyone to turn to for advice on this topic. If your bank provides financial education programs and informational resources, it could strengthen relationships with existing customers and reach other people in the surrounding community.
  • Helpful reminders. No one likes being caught off-guard by financial issues, and your bank can help by letting customers know when their account balance is running low. Along with that, you can send your clients updates on any events you have scheduled for the near future.

Creating Meaningful Connections Through Legacy and Estate Planning

By focusing on the services listed above, banks can put customers first and create relationships that will last for decades to come. Even so, your relational relationship strategy should go beyond sending reminders to clients and maintaining inviting branches. You’ll need to think about the services your bank offers and balance transactional vs. relationship banking strategies—especially when you have a chance to provide services your competitors aren’t delivering.

Though everyone has to plan for the future, many of your clients probably haven’t begun making the comprehensive plans they’ll need. Surprisingly enough, a mere one-third of all US adults have created formal legacy plans. If your bank adds legacy and estate planning to its service lineup, you can connect with your customers on an emotional level while offering truly unique services.

What Can The Postage Do for Your Bank?

Considering the benefits associated with legacy and estate planning services, you may be wondering why more banks don’t offer them to their customers. The fact is, the vast majority of financial institutions can’t provide these services on their own. But even if that’s the case for your bank, you can still offer legacy and estate planning to your clients—you’ll just need to team up with a partner first.

At The Postage, we aim to help financial institutions build long-lasting customer connections through legacy/estate planning services. Since our platform is relationship-driven, we’re the perfect choice for banks that are focusing on relational relationships. At the same time, you’ll enjoy significant financial benefits while working with us—for example, some of our top-performing clients experience ROI increases of 300% or more.

With the support of The Postage, your institution will be able to provide planning services to:


When they use services powered by The Postage, people can easily manage:

  • Documents and Data. The legacy planning process requires people to have access to all sorts of documents and data points, including passwords, insurance policies, wills, account numbers, and more. The Postage doesn’t just give people a chance to put all this information in one secure place—it gives your bank a chance to connect with beneficiaries along the way.
  • Estate Details. People going through the estate planning process also need to keep track of information such as inventories, deeds, insurance details, and broker information. With The Postage’s platform, your customers can reduce the stress associated with managing these details.
  • Messages and Memories. Documents, data, and estate details aren’t the only things worth protecting while taking care of legacy planning—your clients will also want to save videos and photos that mean a lot to them. Fortunately, The Postage allows users to save files like these in digital vaults and look back at them later on with timestamp features.


Businesses should also have a plan for the future in the form of a succession strategy. When companies don’t go through this planning process, they could have a hard time continuing to operate if they change hands.

Even so, just one-third of all small and medium businesses (SMBs) have created succession plans. Because of that, your bank has an opportunity to help SMBs manage:

  • Details and Assets. Before business owners can finish the process of transferring ownership of their companies, they’ll need to pass a great deal of information along to new owners. When these people use digital legacy planning services, they can put accounts, contacts, and other crucial information in one easy-to-find place.
  • Vital Documents. Like individuals, businesses must keep track of all sorts of documents while planning ahead—including documents related to their plans, protections, and processes. Fortunately, The Postage can help.
  • Succession Strategies. Establishing a clear line of succession and an easy-to-understand succession process can help businesses change hands with zero difficulties.

Take the First Step Toward Building Relational Relationships

While maximizing customer loyalty can be tricky for banks right now, this is far from impossible. If you understand the basics of transactional vs. relational relationships and make an effort to form emotional connections with your clients, you’ll be able to earn their loyalty and bring their families into the wealth-building process—both now and decades into the future.

As you can see, introducing legacy and estate planning services can help your bank go beyond transactional relationships with its customers. The Postage is the perfect partner for banks interested in offering these services: when your bank utilizes our platform, it can strengthen its existing connections and build new relationships. If you’re interested in The Postage and its services, schedule your demo today!