If you want to know if your bank has an alignment problem, try this – Ask ten co-workers, ”What is it that your bank is selling? If 80% or more say close to the same thing – that is fantastic, and you are likely in the top 1% of bank performance. If 60% of your co-workers say about the same thing, then move on as that is good enough not to make bank alignment a priority.
Cash flow is the lifeblood of any corporate client. While understanding cash flow is the stock and trade of bankers, few bankers take the time to add this value to their small business, corporate or treasury management clients by leveraging this knowledge. Before you dismiss this as an unneeded item, consider banks like Well Fargo and Bank of America not only train their bankers on this very topic but offer a robust educational program around cash flow management (HERE for example).
Trying to sell more loans and deposits is a different strategy than trying to add value to the customer’s life. Jim, a commercial bank customer has a company that produces high-end drum equipment. Back in 2014, Jim drew 95% of his availability in anticipation of the holiday season. In early 2015, Jim got a note from his banker that the line was being increased due to the increase in sales volume.
A popular night club represents the perfect allegory for creating a value-fueled bank and should be an exercise that you complete at your next strategic planning meeting. Consider a popular club with its red velvet rope and a line of good looking people waiting to get in. If this is the case, the club can make the decision of who it lets in and how much to charge all the way up to the point where that line ceases to exist. What would it take for a bank to have a line of people out the door waiting to get in?
Every January, we advocate taking another look at your value proposition to see if there are any changes that need to be made.
Part of the problem with the current state of banking is that it is hard to tell one community bank from another. Because of this fact, loans, deposits and other bank services have largely turned into commoditized products. In some cases, bank margins are lower than they are for bottled water. If retailers can charge up to $6.00 for water, surely a bank can differentiate itself.
