I don’t take credit for much, but Total Relationship Banking (TRB) is a term that I created while working with the Colloquy consulting group around the turn of the Millennium. I recently had the chance to catch up with the “Patron” of TRB, Fabio Garcia and our talk spurred thoughts for where TRB might be headed in the future.

After working together to launch “Premia” several years back, I had a vision of how banks could finally take their card based rewards programs to another level and build enterprise-wide loyalty in the process. Excited about unleashing a new concept in retail bank marketing, we expected to see many banks follow suit.

Interestingly it took 2 years before Citi launched ThankYou! and another year or so for National city to launch its Points program. During the recent economic cycle, National City was acquired by PNC Bank and the PNC Points program remains in market today. An even longer respite occurred before Regions Bank introduced Relationship Rewards this summer.

With Regions’ new entry into the market, the question seems valid to ask again. Will TRB become the “next new thing” in retail bank marketing.

The answer: No – at least not by way of the model used by Regions Bank.

TRB has always been challenged by a short list of key obstacles:

1. Who Owns the Program?

Rewards in banking first took hold in cards and extending the currency to retail, mortgage and wealth management groups introduces potential conflict for program management. Only with Executive level support and a loyalty czar in place, do multiple product owners cooperate to the extent needed to achieve success.

2. How do we measure profitability?

The metrics used to track profitability in cards, retail banking, and loan areas are distinct. Appointing a standardized value for a loyalty currency and mandating its use across all product areas is not an easy task.

3. Who pays for the program?

The substantial cost of operations and allocation of financial liability is a sensitive topic. If I own consumer loans and only want to participate in my TRB program on a promotional level, do I accept cost allocation or do I just purchase points from the program owner as if I was a sponsor in a coalition program?

These organizational challenges are tough to solve, but the answers can be found. The place where attention deserves to be focused these days is on the customer.

I recently conducted a review of Regions Bank Relationship Rewards and, while it is clever and well thought out, the earning grid is too much for most consumers to understand. The temptation to over-engineer loyalty strategy is irresistible at times – I’ve been found guilty of it in the past.

The best strategies are those that can be implemented in a practical manner, are easily explained to customers, and pose the lowest level of friction for enrollment and participation. Establishing a bank-wide loyalty currency creates the foundation for an effective enterprise loyalty strategy, but its use should be apportioned carefully.

Credit and Debit Cards, Current and Savings accounts are high frequency products that are the glue for long term bank relationships. Loyalty currency can be applied in strong doses here. Every other bank product or service is tied to life-events and therefore loyalty currency should be used sparingly and on a promotional basis for best results.

The bigger question is how much customers care about bank rewards programs. I have not been able to confirm that consumers want to consolidate their banking relationship beyond a certain intangible threshold. The Boomer generation grew up hearing about the risks of “putting all your eggs in one basket” and the Millennial generation matured while living through the most frightening banking crisis in several decades.

As one wise banker recently shared with me, we don’t need to challenge the validity of TRB as much as we need to set realistic goals. Maybe we’re not after 80% + of an individual bank relationship, but simply want to establish a core group of products that defines a “primary bank” relationship. In other words, maybe 40% wallet share is 100% victory.

Enterprise loyalty is an achievable goal for retail banks. Striving to create bank brands that drive consumer loyalty, even passion, should be on banker’s lists of Key Performance Indicators for next year. Banks can still create a retail brand promise that is delivered holistically and complements reward with product innovation and outstanding service.

Now is the time to tackle the job, as consumers have never been more interested in transparency, safety and responsible financial management.

Relationship Banking is a term that has been around since the 80’s. In its first use, it described a holistic level of service that branch personnel could deliver to customers by having the entire bank relationship on their computer screen.

Gone were the days of reviewing daily overdraft reports and making subjective decisions about whose items to return or pay – now a branch manager could use hard data to make those decisions.

The concept was right, but retail bankers became distracted with more pressing matters until Banco Popular introduced its Premia program in 2002. I was fortunate to be part of the team supporting the launch, and coined the term Total Relationship Banking (TRB) at that time while working in the Colloquy consulting group (now Loyalty One).

TRB has at its core the use of a common rewards currency (points) awarded to customers to recognize their acquisition and use of any retail banking product including credit cards, debit cards, checking accounts, loans, and investment products.

TRB has become a commonly used industry acronym and once Citi launched its ThankYou! program in 2004, the buzz was that TRB would take retail banking by storm. Instead of a tidal wave, we saw just a ripple or two hitting shore as National City launched its Points program in 2006 followed by ….. nothing.

Nothing that is, until Regions Bank, the 22nd largest US Bank with $137 Billion in assets, launched Relationship Rewards during this past summer. Now we have banks ranking #3 (Citi), #12 (PNC), and #22 sporting a TRB model to increase customer loyalty and retention. As a footnote, PNC acquired National City during the past 2 years and morphed Nat City Points into their own branded currency. It says something about the value of the program that it was not shelved during the course of PNC’s takeover of National City.

One of the outcomes of the recent financial downturn has been increased focus in retail bank marketing on building relationships, encouraging financial literacy skills, and introducing or re-shaping loan and deposit products. The emphasis has been on transparency and value and consumers are responding.

Relationship Banking is a complex model to structure and manage and there is mixed research on whether consumers really want to put the majority of their eggs in one basket, regardless of how many points they can earn.

I’m going to take a closer look at the Regions Bank program this week and also summarize the opportunities and challenges with TRB over the next few posts.

If you’re not a banker, don’t worry, I have a juicy Foursquare post ready to go!

Citibank launched its ThankYou! Network in 2004 and in doing so,  staked out ground as the first top-tier bank to embark on a rewards program that went beyond credit card and included multiple retail bank products like checking accounts and consumer loans.

Credit to the first bank to launch a Relationship Banking program in North America goes to Banco Popular de Puerto Rico which launched its Premia program in 2002. The architect of the Premia program, Fabio Garcia-Passllacqua, deserves kudos for incredible vision and courage in launching Premia and can be proud that the program continues to return strong results to the bank.

Citi has made progress with its program, its alliance with Expedia just one example of extending the value of their ThankYou! points through intelligent partnering.

Two news items sighted this week, however, may signal a change in course for the ThankYou! program and its value for it members.

First, AMR Corp., owner of American Airlines, announced that it had taken steps to raise $2.9B cash to quiet investment community concerns about its future liquidity.  In a press release, AMR revealed details of the cash raise and that it had agreed to sell $1 Billion of AAdvantage Miles to Citigroup, its long standing cobrand credit card partner.

Though Citi reported to treat this advance purchase as a loan, it clearly indicates the importance of the Citi AAdvantage credit card as the flagship product in Citi’s card business and the confidence the firm has in its ability to drive card usage and acquisition by offering AAdvantage miles as a reward.

It also highlights that while relationship banking remains a challenging concept to sell to consumers, credit card rewards programs are like the high-hot heat that got Nolan Ryan into the baseball hall of fame.  Like the fastball, it’s a straight-down-the-middle value proposition that consumers understand.

The second news item that not everyone will connect to ThankYou! is Citi’s announcement that it is concentrating its retail banking business in the U.S. on six key markets. Explained another way, Citi is executing a plan to close branches in many markets and shrink its retail delivery system. Though Citi offered a statement that “Customers, not products, are driving Citi’s strategy for North America consumer banking”, one has to wonder how easy it will be to compete for deposits with the likes of Bank of America and Chase when the only way to open an account for customers outside of the 6 markets is through a website.

The two announcements taken together makes you wonder if the expansion of a relationship banking program can be successful as the institution scales back its retail network, and if the temptation to return to a cards-centric approach to rewards to meet short term goals will put ThankYou! in a back seat.