Throughout my 30 years of working with banks and credit unions, bankers have focused on a singular two-word phrase: relationship banking.

Even before the coronavirus, there was a passionate renewal of relationship banking’s importance, with a specific focus on primacy – primary versus non-primary households. What’s evident is that all relationships are not created equal: Half your customers see you as their bank and about half don’t.

It’s the curse of free checking. Free worked for years, but it moved a lot of unengaged customers from bank to bank. That made it even harder to cross-sell services to grow and retain each household.

Focusing on Primacy
After the last recession, technology changed retail checking dynamics, and customers’ buying habits evolved. This requires banks to refocus on primary relationships.

Primary household relationships generate the lion’s share of revenue that drive profitability. The top 10% of your bank’s checking account households average $147,000 or more in deposits and loans per household. The next 50% average $16,000 per household.

The bottom 40% of checking account households average a total of $800 in deposits and loans per household. They like your bank enough to have a small checking account with you – but that’s it. They are non-primary.

Here’s the secret: It’s actually less expensive to reacquire and grow non-primary relationships than it is to battle other financial institutions in hopes of acquiring new relationships. But time and time again, banks of all sizes rely on conventional wisdom to define primacy that doesn’t pan out when they actually do the analytics.

Recapturing Current Customers
You need a primacy game plan. Start with an analysis of your bank’s current situation to determine your current definition of primacy. Once you’ve defined primacy, design products and strategies that will further engage primary customers and allow you to reacquire non-primary ones.

Trust me, your bank’s working definition of a primary customer will always reveal itself when you delve into the data to study household deposits and loans. StrategyCorps has more than a billion data points in our database from hundreds of financial institutions. Collectively, a review of this information shows us two things about banks like yours:

About 60% of checking account customers represent 98% of the relationship dollars at your bank.

The other 40% of customers represent just 2% of your household relationship dollars.

Your checking products are essential to driving the engagement that creates primacy. Successful retail banks – especially megabanks like JPMorgan Chase & Co. and Bank of America Corp. – study their analytics and define their segments based on household relationships from that analysis, then build products that will appeal to these segments. Chase Bank’s annual retail report gives insights into two key benchmarks:

More than 75% of their checking households are primary.

The retention rate of those households was 95% in 2019.

Both of these stats are at least 10% better than those of the average financial institution (including yours). What would it mean if your bank improved household retention by 10% in 2021?

You can. Just follow our lead.

Unlocking Customer Analytics
Analytics isn’t as big an obstacle as you think. Some of your banks can perform analytics in-house; others partner with a third party that give them the power to find, analyze and define their checking account household relationships.

Only then can you develop products and strategies to monetize what you’ve learned by identifying, protecting and growing your best relationships, and reacquiring the non-productive relationships that are currently dragging down your earnings.

If your bank wants to deliver something that can actually be implemented quickly and produce results next year, here’s what I recommend:

Understand the concept of primacy and start talking about it with your management team.

Start with the numbers. They are extraordinarily insightful about your current situation and can provide an objective look at who your primary and non-primary customers actually are.

Finally, ensure that whatever analytical tool you use – be it internal or from a third party – is actionable. It must allow you to use the data harvested to develop better products that deliver more real value.


Dave Crook