Innovations in the banking sector have
transformed the way that business is conducted. In order to fully take advantage of
such technological advancements, it is
imperative to partner with a bank that communicates how new products and services
on the market can improve your company’s
efficiencies.
“If it’s been over a year since you’ve had a
conversation with your bank about new
innovations and the banking services you
should have at your disposal, then you are
probably being underserved,” says Syd
Saperstein, senior vice president, division
manager of Comerica’s Special Corporate
Financial Services Division.
Smart Business spoke with Saperstein
about what products and services should be
expected from one’s financial institution.
How would you define the term ‘underserved’
as it relates to banking?
The banking industry has grown, as all
industries do, and has come up with innovations, new cost-effective services and labor-saving solutions to handle problems that
businesses face in the electronic age of the
2000s. We have consolidated and developed
a lot of services that used to be spread
around many different banks or many
departments within a bank — now they are
often seamlessly available in one place. Most
customers, however, have not been given a
road map on how to interface with their
financial institution. And most financial institutions have done a relatively poor job of
educating their customers about what
improvements have been made. Consequently, customers are not getting the full benefit of
the banking relationship that they could.
How can a business determine if it is being
underserved by its bank?
Start by asking some questions: When was
the last time my bank spent the time to educate me on the improvements in their world?
When was the last time they pointed out
improvements to the interface between businesses and banks? How can changes in treasury management services and the work that
banks do internally translate into cost savings for me by taking over some of my work?
If you haven’t had a conservation like that,
then chances are — just by the sheer
increase in new products and services that
banks develop and the passage of time —
you are probably being underserved.
What advancements in the industry have
occurred in the past decade or so?
Complicated multilevel transactions are
now handled electronically, and there are
advanced methods for batch file handling
and consolidation. Internal accounting and
subaccounting systems have developed within the most progressive banks. These sophisticated systems enable a bank to slice and
dice their customers’ business and deposit
relationships into regions, territories and
sales offices, for example. In the past, a company’s employees used to have to keep track
of all this information. Now, it can be handled
within the bank, which saves the customer
on personnel expenses.
What specific industries are most commonly
underserved?
The ones we find most underserved are
either the newest industries or the oldest
industries. A company that starts today may
‘think small,’ go to a local branch and find the
expertise that exists on the street level within a banking structure is not sophisticated
enough to handle its needs.
On the other end of the spectrum are old
companies with a lot of mature management,
such as law firms or insurance companies.
Law firms are often run by a management
committee composed of the most senior
partners. While their skill sets were probably
well suited to manage a banking relationship
25 years ago, they may be very different from
the skill sets that are being taught and used
most effectively today. In order to keep their
company as progressive as possible, they
could very well benefit from partnering with
a bank that is able to give them some up-to-date advice about what should be improved.
What products and services should be
expected from one’s bank?
First, businesses need to take a look at the
nature of the relationship. If they’re not having a conversation with their bank about
innovations at least once every six months
then something is wrong. Innovations within
the banking world happen that frequently.
Second, you should investigate how the
bank can take over labor-intensive transactional activities that are currently being handled internally. A specific example is processing 1099 Interest Income statements.
Law firms frequently have to dedicate lots of
staff time or even add staff in January and
February so they can handle the processing
of 1099 forms for the individual taxpayers
whose funds are sitting in trust accounts with
them. In today’s world, the 1099 work can be
done by the bank for each component of a
trust account. What’s worse is that, based on
our experience and what we have learned by
survey, the error rate on 1099 work done by
nonfinancial institutions is around 20 percent, which can be very costly. Our error rate,
for example, is far less than one-tenth of 1
percent. This is an area where businesses
could avail themselves of using a bank’s services at low or no cost and replace a cost that
is very high to them.
SYD SAPERSTEIN is senior vice president, division manager of Comerica’s Special Corporate Financial Services Division. Reach him
at (415) 477-3246 or [email protected].
