Federal, state and local governments have unique needs. Banks, in response, have dedicated a portion of their business to address them.
“There are many best practices that can be implemented if one understands the laws that affect government,” says Karen Bigelow, senior vice president and regional manager of the government banking division at U.S. Bank.
With open communication, banks can develop customized services that help government entities. Getting them to talk, however, can be difficult.
Smart Business spoke with Bigelow about some underutilized services banks can offer government entities.
What do government clients need?
The needs of government entities are vast and broad. They need support in collections, disbursements, investments and borrowing the cash necessary to support operations.
The challenge with serving government clients is they are often broken down into decentralized units with special responsibilities. That requires banks to learn about all of them in order to take a consultative approach and apply experts in certain business lines to help these entities solve problems.
The more a bank understands how a government entity operates, the easier it is to recommend appropriate solutions. It’s critical to have a strong relationship that allows the sharing of information so that banks are not recommending a one-size-fits-all solution that isn’t appropriate.
What are the typical barriers to working consultatively with government entities?
The organizational structure of governments means not one person has all the details, so banks must talk to multiple people to get a full understanding of its strategies before offering consultation on services.
Governments often bid for banking services using requests for proposals handled by a purchasing department, leaving little interaction with a financial institution except through email. This impedes the consultative communication that leads to an understanding of the entity’s processes, which leads to competition among banks based solely on price.
What are common government pain points?
The most common issue is in addressing its collection and dispersing of revenue in a timely, but more automated way with reduced staffing and budgets.
Government, in an attempt to collect money securely, must to do so without disrupting customer service. A bank can work with government to find the most efficient process of delivering a service in the least costly way while balancing the needs of customers with the efficient execution of duties. This often requires a lot of consulting with its financial partners.
What services can banks offer that many government entities may not realize?
Banks can offer a lot of services traditionally provided by third-party vendors, such as electronic services for billing and collection, and presenting statements.
When looking to improve their technology, government entities will often hire third-party consultants, not financial institutions, to help implement the same electronic payment services banks provide.
Governments have an obligation to stale-date a check after a certain period of time that it’s been outstanding. Banks offer a service that helps them comply with state audit rules and automatically eliminate those checks from their outstanding payments. There are also lockbox collection services for all types of payments, including electronic.
In addition, banks can help governments disburse high-volume payments such as unemployment through card services.
How can working closer with a bank be beneficial to governments?
Government entities have a fiduciary obligation to protect funds, but they must do that while serving a diverse population. Sharing information about their needs can be beneficial. In the process, government entities gain free consultants while saving money by optimizing operations and minimizing third-party vendors, protecting their information and public deposits.
Time is a precious commodity. The more governments share information with their banks the more help can be provided to save time by processing more effectively.
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