Any beneficial relationship involves a
lot of give-and-take on both sides. If
the scales tip too far one way, the relationship cools and important benefits
get left on the table.
Unfortunately, when it comes to the business/banking relationship, the bottom line
today too often comes down to the lowest
bid and the lowest rate, making it difficult
to drive the maximum value out of this crucial partnership.
“The key to a long-lasting and beneficial
banking relationship is the free flow of
information from both sides,” says Robert
H. Friend, senior vice president at
FirstMerit Bank, Columbus. “The biggest
element is to limit surprises so when something unexpected happens, both the
banker and the company can work through
the problem together.”
Smart Business spoke with Friend about
how companies and banks can work
together to build stronger and more versatile long-term relationships that ultimately
benefit both sides.
How would you describe a healthy banking
relationship?
At the end of the day, we’re all selling
money and we’re all collecting money. The
key is how a bank services its customers,
makes sure they are comfortable, and how
the bank meets their needs when they have
an issue or a concern. The key to a healthy
two-way relationship is communication
and give and take on both sides. It’s the
banker’s responsibility to continually inform the company of any changes in the
bank’s personnel or changes in attitude or
corporate culture.
Conversely, a company should inform its
banker of issues it might be encountering.
The goal is to minimize surprises and maximize the relationship through collaboration.
How does a good banking relationship mitigate turnover and change?
Both sides should be willing to foster
multiple touch points within their respective organizations. The banker should get to know the company’s owner, chief financial officer and chief operating officer. The
company should aim for tight relationships
with the bank’s lending officer, the officer’s
manager or market president, the banking
assistant and possibly one of its underwriters. In this case, if someone on either side
leaves, there are still two or three solid
touch points or ties available to the respective organization.
How does this free-flowing information create opportunities?
All too often, companies think of their
banking institution simply as ‘the place I
put my deposits or satisfy my lending
needs.’ But most banks have numerous
other products and services to assist a
company, such as special benefits for
employees with workplace banking, private banking and wealth-management
services, or corporate needs like cash flow
management and company-sponsored
401(k) plans. It’s the banker’s job to bring
these valuable services to the table.
The most underappreciated and least-tapped service a banker can provide is
expertise and advice. For instance, when a
company is considering a new line of business or geographic expansion, the banker can be right alongside saying, ‘Hey, we’ve
seen other people do it. Here are some of
the issues they’ve had and here’s how they
went about gaining success.’ In addition,
the banker can make introductions to
these other companies or other advisers.
Can a solid banking relationship actually
supplement hard financial data?
Absolutely. It is easy to come to a conclusion on a course of action based strictly on
the numbers, but that decision may not be
in the best interest of the bank or the company. The reality is that numbers — good
or bad — are only a part of the story. The
developed relationship enables the bank to
understand the reasons and actions that
led to the numbers. The developed relationship enables the company to have a
better feel for how the bank is likely to
react. Most importantly, an established
relationship fosters a positive environment
that encourages the parties to work together to resolve a problem or issue in the best
interest of both.
How can the bank/business relationship be
maximized?
Companies are always going to shop and
compare prices, but if they are often shopping numerous banks, it can take the relationship aspect completely off the table.
Long term, that does not foster good feelings from the banker’s perspective.
In reality, both sides are often much better off maintaining what they have and
building a mutually beneficial relationship
that might not always provide the absolute
lowest cost to the company or highest
return to the bank. Considering the expenses, to set up new systems involved
when a company changes banks — and the
costs that banks incur when bidding to
gain new customers — it would seem sensible, to find the right fit and work on maintaining a healthy and profitable relationship for both parties.
ROBERT H. FRIEND is senior vice president, FirstMerit Bank in
Columbus. Reach him at [email protected] or (614)
545-2763.