Is your banker a commodity or a valuable
member of your advisory team? As banks
merge and grow larger, is your relationship reduced to only numbers? A commercial
banker should bring far more to the table
than products and services.
“Remember, bankers don’t get paid to say,
‘No,’ they get paid to figure out ways to get
things done,” says Mike Sweeney, vice president, commercial team leader, Huntington
Bank, adding that bankers don’t bill by the
hour. “We are one adviser you can access and
not be on the clock,” he says.
As a business owner, you should set the bar
high for your commercial banking relationship. “You want a banker that will speak up
for you — a voice that represents your business within your banking institution in good
times and challenging times,” Sweeney says.
Smart Business spoke with Sweeney
about how to determine whether your
banker is adding value to your business and
what qualities to seek in a commercial lender.
How do business owners know if their relationship with a banker is value-added?
If you answer ‘no’ to several of the following questions, reconsider your banking relationship. They are realistic, important services your commercial banker should provide
as an adviser to your business.
- Does your banker initiate communication most of the time, or are you always the
first one to pick up the phone and call? - Has your banker helped guide you
through a time when your company had negative operating performance? - Does your banker have experience — a
good 10 years in the field? This shows that he
or she has chosen to serve business owners
and gains pride from advising companies like
yours, and has experience from which to
draw. - Does your banker structure loans to
match your cash flow, or does he or she treat
your request like a car loan: 60 equal payments? Your cash flow may fluctuate
throughout the year. - Does your banker try to sell you the product of the month? Actually, you want a ‘no’
answer here. - Has your banker introduced you to senior management? You need multiple points of contact within your bank, especially with
those in higher-up positions that can ‘take
care of business.’
7. Does your banker respond in time frames
that meet your needs? Sometimes you have
to push because the bank’s process may take
longer than your time constraints allow. Your
banker should accommodate your deadlines
or tell you upfront that your time frames are
unrealistic and work with you to develop an
agreeable timeline.
What should business owners expect from a
commercial banking relationship?
Specifically, you should build a relationship
with a banker that anticipates your needs and
responds with creative solutions before a crisis. You may ask your banker for a certain
loan, and if the banker simply fulfills your
request, is he or she really providing you with
what your business needs? Perhaps not. The
fact is, your job is to run your company, and
the banker’s job is to outfit your business
with financial solutions — you can’t keep up
with all the products and services in the market today. You shouldn’t have to do your job
and your banker’s job.
That said, your banker should know your
business well enough to understand what
products and services best suit your business
objectives. This leads into another key quality that good commercial bankers share: a proactive attitude. Your banker should listen
more than he or she talks, and he or she
should ask questions about your industry.
Most importantly, you want a banker that balances his or her interests in the bank while
serving as your advocate. Your banker
should champion your cause and understand
what’s going on behind the numbers so he or
she can meet your needs.
Is lower cost better? Why or why not?
You don’t choose your law firm or accountant based on low cost. And if you did, they
would likely tell you that you get what you
pay for, which is true. Banking is not all that
different. Banks that lure in customers with
the promise of low prices are probably covering for deficiencies in other areas, namely
value-added services and the way they
engage with customers. Most banks offer
competitive rates and products because
those are the commodities in the relationship. But you can’t put a price on service.
While you may choose a bank with the lowest rate for your car loan, this isn’t a wise
practice to follow when seeking a commercial banker. Price is a small slice of the pie. A
value-added banker will provide the other
pieces of the relationship as well.
How important are numbers and ratios?
As banks grow larger, there is a tendency to
use credit scoring and certain ratios in loan
approval processes. Those are guidelines and
an indicator of future performance, but they
aren’t everything. Numbers and ratios certainly should not define your banking relationship. These numbers are indicators of
past performance, not necessarily future
cash flow that will pay back a loan. It’s always
easy to make decisions by looking in the rear-view mirror of the company. But ‘value-added’ bankers should also be able to look
forward, understand your vision, determine
if it is based on reasonable assumptions,
determine if it gives the bank the proper
risk/reward, and then sell it within his/her
bank. That is the banker you want.
MIKE SWEENEY is vice president, commercial team leader for
Huntington Bank in Akron. Reach him at (330) 258-2351 or
[email protected].