What mistakes do business owners make when choosing a new bank?
The bank on the corner or across the street from your office isn’t necessarily the best match. In real estate, location is king. In banking, convenience is critical, but that doesn’t necessarily mean the bank should be located within eyeshot of your headquarters. You want to partner with a bank that provides the best service and the products that you need.
Should you decide to do business with a financial institution across town, you could always retain a payroll account at a neighbor bank for the convenience of employees with payroll accounts at your business. With the ease of today’s electronic banking, you can seamlessly transfer dollars online from one bank to another.
This arrangement is necessary in some instances, but ideally, once you decide to move your banking business, you should move all of your business, including loans and deposits.
How important is pricing when choosing a bank?
Pricing lures business owners to the front door of a bank, but prices are deceiving. Is the bank truly offering the level of service and product portfolio that your business requires? As with anything, you get what you pay for. Be sure to shop more than one bank. Interview several prospects and do not rely on a single referral from your accountant or attorney.
Do check out the bank your advisers suggest, but don’t limit yourself to that one. Also ask peers in the business community who they bank with and why. During networking events, pose the question: Who is your banking partner? Most business owners are open to providing candid feedback. From there, visit several banks that can fulfill the objectives you identified for your business. Just because a bank coins itself as ‘business-friendly’ doesn’t mean it will retain that philosophy. Look for a bank that communicates a consistent message about its culture and philosophies.
Who should be involved in choosing the bank?
Usually, the CEO or business owner, along with a chief financial officer or lead accountant at the business, will be involved in the banking decision. Be sure that everyone is on the same page, prioritizing relationship, cultural fit, products, services and the financial health of the bank.
When visiting a bank, speak with more than one representative. Talk to the senior lender, a retail manager or someone in treasury management. Ask to meet with a member of senior management.
Be sure each associate communicates the same ideas and that you click with more than one person. In case of turnover, you want to develop relationships with several associates who will take the time to understand your business and needs.
Darlene Nowak-Baker is an executive vice president and lending manager with First Place Bank. Reach her at (248) 358-6403 or [email protected].