How Befriending Your Bank Can Help You Build Wealth

Most of us are happy to keep banks at our arm’s length.  You probably seldom think of banks as a service provider of sorts, with whom it’s worth your while to build up the kind of amicable long-term relationship you would with your hairstylist,  doctor, or car mechanic. But in giving your bank the cold shoulder, you might be missing an opportunity to help ourselves as well.

Not as scary as they seem

It’s not your fault if you find your bank less than cuddly. For most of us, banks are gigantic machines – impersonal, complex, and at times bureaucratic.  They are also powerful and fearsome mammoths.  As the key to the day-to-day running of our entire economy, their failure can cause havoc, as we witnessed in the last few financial crisis.  And banks’ image got no help from the Lehman Brothers Minibonds saga in 2008, nor the prime-time TVB series that later dramatized it.

But you don’t have to have a bad relationship with your bank. I still remember how my mother opened a bank account for me when I was a small kid.  I was thrilled to get the promotional piggy bank, a small replica of the bank building. I didn’t know what it meant, or how banks and money worked. But it did plant one enduring thought in my mind: That bank was the one and only bank in my little world. Talk about a successful promotion!

In the years that followed, I conducted most of my financial activities through the same bank.  Frankly, it was out of convenience, without any deliberation. But while I stuck with my favorite institution, many other people would hop across different banks, driven by whichever tactical promotions seemed most attractive at the time. Now, with life milestones under my belt and years of experience, I’ve gained enough perspective to think that I’ve been making the right choice to stay with one bank for the long haul.

The bright side of a banking buddy

What are some of the benefits of building up a long-term relationship with a bank?

1.     Loyalty programs

Banks segment their customers into tiers according to the so-called “customer relationship balance,” which is basically the value of your assets with the bank.  As with any loyalty program, customers at the higher tiers get preferential services and offers.  This means better interest rates and foreign currency exchange rates, discounts or waiving of certain handling fees, and many other services.  Top-end customers enjoy private banking services, including access to a wider selection of investment tools.  These material benefits all go directly to your bottom line.

Different banks have different asset value requirements to each tier.  It’s worth spending the time to check out which one works best for you.  At least during the early stage of your wealth accumulation, concentrating your assets in one bank enables you to reach a higher customer segment and enjoy those benefits faster.

2.     Credit

For many of us, property mortgage is possibly the most important form of loan we ever use with a bank. When you have a long and “clean” history with a bank, you enjoy a better chance of negotiating more favorable mortgage terms.  “Clean” means you have not defaulted on a loan, forgotten to pay your credit card bills, or made frequent, unauthorized overdrafts.

3.   Global banking

When I relocated overseas a decade ago, my bank proved unexpectedly helpful.  When you are new to a country, you have no credit history, and even getting a credit card can seem impossible. Since my bank also operates in my new home country, I was able to leverage my past history with the bank to swiftly set up various financial facilities.  Moving my money from one country to another got a lot easier, too. As mobility becomes more common these days, this service might be of substantial help to you one day, too.

Before you wonder whether we’re getting too cozy…

This is not a cheesy bank commercial – far from it.   At the end of the day, banks are here to make a profit from your business, and there is nothing sentimental about that.   Rest assured that you do pay for every free cappuccino you enjoy at the bank, one way or another.  In essence, it’s just another mutually beneficial business relationship. So if the bank’s going to get what it wants from you, you might as well get as much as you can in return.

It’s worth noting that in recent years, many banks have put a renewed focus on retail banking.  Consider taking advantage of these resources, and using them to achieving your financial goals.


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