If you have to battle the large national or regional banks for treasury management business, then you are in luck because competition is easy. Of course, many community banks don’t feel that way, but often that is because they have the wrong approach. At a recent conference, we gathered a group of banks to distill best practices and then enlisted the help of Mary Morgan, CEO of Financial Shop Solutions that specializes in helping banks better compete. This post highlights the 6 things you need to do to help your bank win over the most valuable product in banking – treasury management.
By way of background, we have discussed the platform that is required to go after the small or mid-sized corporate customer (HERE) and even gave banks benchmark workflow documentation. We also covered how to conduct a proper needs assessment and provided a sample for that (HERE). In this post, we discuss how to specifically position your bank against a larger competitor with the goal of winning the most profitable lines of business in banking.
This comes down to: 1) Choosing the right customer; 2) Knowing how the current environment influences your sales approach; 3) Positioning the right products to match the customer and the environment; 4) Delivering the presentation/proposal with speed and effectiveness; 5) Getting the pricing structure right; and, 6) Doing all the above wrapped in a quality presentation.
If your bank is projected to be short on deposits or if your bank struggles for profitability, chances are your treasury management function might be in need of an upgrade.
Find Companies That Care And Then Care More Than They Do
The first step is to choose the right customer. One area that community banks do well with is caring more about their customers than big banks do. One area where we do poorly on is finding customers that care about banking. The first step to creating success is to find customers that value banking service. A customer that is just concerned about price at the expense of service is probably not your best customer. Yes, community banks can often are less expensive compared to larger banks, but a price-driven customer is probably not suited for the smaller scale of a community bank.
Making sure you have the capabilities to service the business and making sure that customer is suited for your bank will reduce a myriad of costs and problems down the road. We went after a car dealer customer once that had a large amount of small payment transfers back to their customers. At the time, we were not equipped to handle some of the payment challenges, yet we went forward despite that fact. That was a mistake because we turned a profitable customer into an unprofitable customer due to the amount of manual processing required. If a customer is too big or too complex, may it is better for all parties if your prospect does end up with a large bank. Understanding who your customer is and who your customer is not (the more important question) is step one.
Once you find the right customer, then you have to demonstrate you care by executing the steps below:
Knowledge Of Current Concerns
One item that sets successful banks apart from non-successful banks is an understanding of the current concerns of the average corporate treasury manager. Here, community banks lag in the application of current events and concerns on banking product.
We asked 10 bankers what are the current treasury management concerns of their commercial customer and few related concerns that were even in the top 10. Below is an updated list of concerns from a recent survey from the Association of Corporate Treasurers. As can be seen, Brexit and its resulting currency volatility has caused a heightened concern over managing fluctuations.
Looking through the list of other customer concerns, you also draw the conclusions that banks are not doing enough to integrate risk management, interest rate, credit, liquidity, economics and security. Having an educational program and bringing experts within your bank together to help build solutions can help your bank generate a superior product that can set you apart from the competition. Your bank’s expertise in these areas is just waiting to be leveraged.
The Right Products – International And Mobile
This goes back to our point about finding the right customer and having the right product.
If you don’t have international service capabilities you should. We make our platform available to all banks, so there is little excuse. Foreign exchange activity happens to be highly correlated to profitability, so if you find a customer with foreign exchange challenges, chances are they are a customer you want. The same is true for allowing business more visibility into their cash position. As we wrote about last week (HERE), there is existing banking technology that can not only gives banking customers a current view of their cash position but by incorporating the newest artificial intelligence into treasury management, banks will soon deliver a superior product that will become standard.
Another critical product to start to work on is mobile. Lots of banks have a great treasury management suite but lack those capabilities on mobile. Many banks don’t have any commercial treasury management capabilities for mobile, so if your bank does, that is a huge competitive advantage to leverage. If your bank does not, it needs to have a plan as this functionality is critical to winning future business. For example, few banks can initiate and approve a wire or ACH payment via mobile. Most profitable treasury management customers are now demanding this.
By listening to your potential clients, understanding the current market and ensuring your bank has the required capabilities, community banks can significantly increase their odds of success.
Speed And Execution
After the groundwork is laid, the next most important part of winning business from large banks is speed and the quality of work product. Once again, the secret is just caring more than your competition. Where a large bank usually takes two weeks to return a proposal, you need to promise five business days and deliver in three.
As we discussed in previous blog posts, a proper needs assessment will create the path to success. This is where you understand your customer’s pain points, fears, objectives and dreams. The needs assessment will create the framework in which you can deliver a successful proposal.
As can be seen above, the proposal should contain those six elements with your recommendations, pricing, and timeline right up in front of the presentation. These should be clear and concise sections. To the extent you can work in graphics and create a visual impact, so much the better. Many banks make the mistake of burying the recommendation and pricing sections in the back. You want the meat of the proposal right up front with the back of the presentation containing the background on how to put the proposal into action, information about your team and information about the bank. These last four sections and are largely standard for each proposal, but if done in a quality way, can create the impression that you put a lot of thought into your presentation.
Finally, community banks need to play up their simple approach as it tends to resonate with customers. Each successful community bank we spoke with not only had a competitive pricing schedule but highlighted the fact that their pricing structure was easier to understand. Giving a single monthly price or a monthly and items price is clearly understood compared to a large bank that will have software fees, scanner rental, location charges, image expenses and deposit fees. Make your price competitive, simple and then help your target customer understand how to compare the two proposals will go far.
Putting This Into Action
If you can execute on all the above, pricing will become less of an issue. While the average community bank is priced below where national and regional banks are on an all-in basis, many banks that we have interviewed had pricing above their national competition, yet are consistently able to win business because of their knowledge and reaction time.
Treasury management is so important for the future of your bank that it is worth investing extra time to create a product suite that allows you to win more customers. It also pays to increase training to your staff since treasury management is one of the more complicated products that a bank has to offer. Identifying and choosing the right customer kicks the process off on the right foot since not every potential customer should be your customer. Getting your staff to know not only the product, but the concerns of the target business will serve you well to bring that customer on board. Finally, taking the time and effort ahead of time so that you can quickly provide a quality proposal that will show your level of caring and professionalism are the keys to winning clients away from the large banks.
Submitted by Chris Nichols on August 01, 2016