What are Corporate Credit Cards? – Different Types of Cards
February 12, 2025
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Commercial banking is fundamentally different from retail banking in several ways. One of the main differences between the two types of banking is the relationship management approach. The commercial banking system relies heavily on relationship management.
Each and every corporate customer of a commercial bank has a dedicated relationship manager. This is possible because of the scale of business that corporate clients provide to their banks. Banks have tried to replicate the relationship management approach in retail banking as well. However, the approach does not work as well since the required scale is not present in retail banking.
In this article, we will have a closer look at what relationship management is and how it is strategically used by banks in commercial banking.
Relationship management is a consultative selling approach followed by commercial banks across the world. As a part of this approach, commercial banks do not directly try selling their products and services. Instead, the first seek to understand the business of their client and understand the process gaps. Once this understanding has been achieved, the bank’s products and services are positioned as solutions to solve the problems being faced by the corporations. Since the products and services offered by commercial banks can be customized to a large extent, the role of a relationship manager becomes very important.
Relationship management has many aspects when it comes to commercial banking. Some of the most well-known aspects have been mentioned below:
Relationship managers are expected to call out any inappropriate risk policies being followed by the client. Sometimes relationship managers are also expected to keep an eye on their client’s financial policies. If these policies seem extremely risky, they are expected to ask the bank to reduce their exposure as well. Hence, it is important for the relationship manager to be aware of how to assess risk and the steps that can be taken to reduce the risk.
In short, commercial banking is highly dependent upon the relationship management-based system. In order to provide personalized services to a high-value clients, banks have to ensure that a dedicated representative is catering to their different needs.
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