Posted: August 31, 2009
Take another look at your banking relationship
In these tough economic times, you want your bank to be in your cornerMichele Falivene
If you look up the definition of relationship, you’ll find references to connection, association and involvement. We should remind ourselves that most of our businesses depend upon strong relationships -- with our customers, clients, vendors and employees. In banking, it’s no different: now, more than ever, it’s time to be sure you have the right banking relationship.
Given these turbulent times, many people and business owners are finding themselves in situations that they’ve never experienced or anticipated. Worse yet, they’re finding themselves with reduced assets, tightened liquidity, less borrowing power and questionable receivables. This imposes an unprecedented and critical importance of managing cash, cash flow and reserves.
With many consumers and business owners hunkering down, it’s a great time to seize the opportunity to demand more from your banker. Now is the time to ensure that your bank understands your personal and business financial goals. Your bank needs to be an extension of your team – especially in today’s economic environment. If you're only using your bank as an enabler of transactions, it’s time to take another look at your banking relationship.
Here are four important points to help reevaluate your bank to ensure they are able to meet your needs:
• Relationships are key: When you do business with a banker who cares about you and your business, it shows. Often times it’s the extra attention you need to help you resolve timely matters and find solutions.
• Access to decision makers: One of the most important elements of a good banking relationship is the ability for a business owner to have access to the bank decision makers. Whether for a loan request or a special circumstance pertaining to your accounts, having the ability to speak directly with a person at the bank who can understand your situation and resolve your issue is very important. Let’s say you own an office building and your tenants are feeling the impact of the economy and can’t make their full payment on their lease. Do you have the relationship with your banker that allows you to collectively evaluate and pursue the right solutions for you?
• Business services: Many banks offer time-saving services for businesses, including remote deposit capture, sweep accounts, deposit pick-up services, identity theft prevention software and online compatibility with your accounting software. Analyze your business processes to determine if the bank meets all of your needs. Remember to evaluate any associated costs, as some banks charge for these services, while others consider them a value-add.
• Interest rates and fees: Interest rates vary depending upon the type of account and the account balance. Be sure to compare account benefits and rate offerings to maximize your options. Take time to understand minimum balance requirements, service charges, and earnings credit and transfer ability. Make certain that your banker will proactively inform you about options and opportunities, products and protections that you may not even know exist to maximize your interest income and minimize risk.
If your bank isn’t meeting all your business needs, it’s time to ask yourself, ”Is changing banks really worth the hassle?” Eliminate the hassle, and the answer is “yes.” Your cost savings and other financial benefits can be significant. In addition, if you take a systematic approach to reviewing your options and initiating the change while your current banking relationship is still intact, the change should be simple and painless. A good banker will help you facilitate the entire process to ensure that your transition is seamless and you begin enjoying the benefits of your new banking relationship immediately.
Community banks are dedicated to the health and welfare of their communities and will respect the individual relationships with their customers. For example, if your bank thinks it’s in your best interest to do business with more than one bank, they should tell you so. Bankers who are truly interested in a long-term relationship are willing to provide the best counsel for their client, even if it doesn’t always increase the bank’s business in the short term.
If you discover that your bank can’t or doesn’t meet all your needs and you are interested in a new bank but unsure if the new relationship will “fit” with your business, it’s perfectly acceptable to move a portion of your banking relationship to the new bank to test the waters. Perhaps you can identify a small account to open on a trial basis and then make decisions once you’ve given yourself time to really learn the new bank. This approach affords a great opportunity to interact with your new contacts and determine if they can deliver what they promise. If they prove to be a strong partner, you can move the rest of your accounts with confidence.
Michele Falivene is senior vice president of First American State Bank in Greenwood Village.