House bank
As a local bank ( english principal banking ) refers to the bank with which a bank customer permanently most of its financial transactions handles.
General
If a bank customer maintains several bank accounts , the main or most important part of all banking transactions falls on the house bank . If there is only one bank account, this is the house bank; However, it is not so designated, so that the term house bank suggests the existence of several bank accounts. The house bank is the primary lender , has an information advantage over competing banks and bears a special responsibility in the financial crisis of its borrower . The business relationship is of a long-term nature.
Small and medium-sized companies and natural persons usually have a close customer relationship with a specific house bank . Large companies such as those that belong to the DAX now only use the “classic” house bank concept in the area of cash management and payment transactions .
Bank customers
If a credit institute is the sole bank account of a bank customer, then this house bank principle entails certain risks for the customer - in addition to some advantages. The sole bank account can take advantage of a monopoly of price-setting which can be demonstrated for the various banking groups in Germany. As a result, the customer has little or no market transparency due to the single bank account and cannot compare prices.
Smaller businesses
Long-term cooperation between a bank and a small or medium-sized company usually means that the bank is better acquainted with the economic, legal and personal circumstances of this company, holds essential loan collateral , and can better assess the opportunities and risks for risk prevention reasons and therefore may be more willing to grant a loan or be able to offer it at better credit terms than a bank that is less familiar with the company.
In addition, better advice can often be guaranteed - for example when hedging against interest rate risks . Because of the dependency that can arise on a specific bank or even on a certain bank employee, smaller companies often work with at least one other bank.
Bigger companies
Exchange-oriented companies are less dependent on individual banks when it comes to financing issues due to the transparency of the capital market . In many large companies, one of the basic principles of financial management is to avoid dependencies on individual banks as far as possible by maintaining business relationships with several banks - also for reasons of comparison. DAX companies often work with twenty to thirty credit institutions.
Both a company's cash management and payment transactions can, however, only be processed efficiently if it entrusts these transactions to as few credit institutions as possible.
Cash management
Companies or groups that have branches or subsidiaries all over Germany with their own bank accounts, for example , simplify their cash management if they are maintained at a single bank and linked to one another via a zero-balancing process. This ensures that liquidity is concentrated in a central bank account on a daily basis and that the financial management of the company / group is able to either invest free liquidity optimally in the money market or to compensate for short-term liquidity shortfalls by taking out loans. This procedure is also common for companies that operate throughout the euro area. It therefore makes economic sense to work with just one or two banks.
Payment transactions
The same applies to payment transactions. Payment data is usually prepared by accounting systems and electronically transmitted to a bank for the execution of the payments. In order to keep the number of interfaces low, we usually only work with one bank. Internationally active companies that have to make many foreign currency payments often transfer their payment orders to a bank regardless of the currency to be paid. You leave it to the bank to execute the payments from the company's foreign currency accounts and to debit the EUR equivalent to the company's EUR account.
If a company has to make payments in euros , US dollars and Swiss francs on a regular basis , it could process payment transactions with a US American, a Swiss and a bank based in the euro area. However, this would mean that it would have to transfer data to three banks for each payment run and coordinate its accounting systems with three different banking systems. For most companies it is therefore more rational to do this through just one bank.
Private customers
Since in most cases only relatively few bank-related transactions have to be carried out with natural persons , several bank connections are usually not worthwhile for one person for reasons of cost and clarity (one then speaks of “overbanked”). That is why most private customers only have one bank account so that there is no need to differentiate between house bank and secondary bank account.
House bank function
The term house bank function is also used to describe the task of the savings banks to ensure that the public sector is supplied with banking services . This includes general banking, the implementation of subsidy programs or the granting of municipal loans . This original house bank function resulted from the ownership function of the municipalities at their local savings banks, on whose administrative board a municipality representative is born chairman (for example Section 11 (1) of the Sparkassengesetz NRW). However, this house bank function of the savings banks tends to be weakened in favor of other groups of institutes. From the point of view of the credit institutions, assuming a house bank function - not only for municipalities - is the goal of customer relationship management .
durability
By definition, the long-term nature of a bank account belongs to the term house bank. There are reasons that cement a bank customer's long-term relationship with a particular credit institution. On the one hand, there are personal preferences (the trusting cooperation with a certain bank advisor), spatial preferences (the proximity of the bank to the place of residence ) and, on the other hand, there are also material preferences (the bank has collateral for the bank customer, which can only be transferred to another bank for additional transaction costs ). These preferences can, in isolation or in combination, promote bank loyalty. From the point of view of the house bank, the customer connection is retained even if the rating deteriorates .
Bank loyalty
In the context of brand loyalty, one speaks of bank loyalty when a bank customer has kept his bank details for a long period of time and is likely to keep them. It is a permanent behavior of the bank customer to repeatedly and largely exclusively use the services of a certain bank. The termination of a bank connection and the establishment of a new banking relationship can cause many inconveniences for the customer, so that only serious mistakes by the bank can trigger this step.
A checking account means that bank customers usually do all or most of their banking transactions with their house bank - the one that runs the checking account - and are therefore regular customers . The Pareto principle can therefore also be observed in the banking sector. 75% of bank customers do not change their bank details . Personal (trust in the advisor ), economic ( switching costs ) and spatial preferences (the proximity of the bank branch ) also have an effect here . Bank customers who already pool a large part of their business volume at one institution are more inclined to use other products from the range of services from the same provider. The willingness of a regular customer to change their established credit institution due to more favorable conditions or bank fees decreases the longer the business relationship lasts.
Related terms
In the case of customers with several bank details, the term main bank details is used to identify the person who carries out the most extensive transactions in terms of volume and / or volume . In private customer business, this is often the bank that manages the current checking account . Accordingly, we speak of secondary bank details when a bank only handles a small part of the customer business. The term is largely synonymous with house bank, with house bank being used more in corporate banking. First bank and second bank are used synonymously . With “core banking”, a company maintains bank connections to several “core banks”, which reduces the dependency on a single house bank.
Others
House bank is also a banking term used by promotional banks such as KfW Bankengruppe and promotional banks of the federal states, which hereby designate the credit institution that checks the borrower's eligibility for funding in advance , forwards the documents to the promotional bank after a positive result, pays the financial subsidies to the borrower and then compliance with the funding conditions is monitored. The development banks themselves therefore never come into direct contact with the borrowers, but always ask for a house bank (house bank principle).
See also
literature
- Literature on house bank in the catalog of the German National Library
Individual evidence
- ↑ Ralf Elsas, The importance of the house bank: An economic analysis , 2001, p. 3
- ↑ Johannes Jaenicke, An empirical study on the price policy of the banks with special consideration of federal bank policy measures , 2003, p. 5
- ↑ Sven Röhle, The non-profit foundation as a shareholder in a Sparkassen AG , 2008, p. 54 f.
- ↑ Dieter Späth (Ed.), Innovations and Concepts for the Bank of the Future , 2008, p. 76
- ↑ Christoph Moritz Wittman, Investment banking and successor advice for the savings banks , 2010, p. 50 f.
- ↑ Joachim Süchting , The bank loyalty as a basis for understanding the sales relationships of credit institutions , in: credit and capital, issue 3/192, pp. 269-300
- ↑ Hermann Meyer zu Selhausen, Quantitative Marketing Models in der Kreditbank , 1976, p. 34
- ↑ Simone Kerner, Analytical Customer Relationship Management in Credit Institutions , 2002, p. 7
- ↑ Hermann Diller, Der hybride Kunde is disenchanted , in: Lebensmittelzeitung No. 13 of March 31, 1995, 1995, p. 40
- ↑ Georg Zollner, Customer Proximity in Service Companies - Empirical Analysis of Banks , 1995, p. 133
