Banking & Finance

Getting to know your bank

By Mark Scott

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If the only person you know at your bank is your relationship manager, you could be asking for trouble, says Alan Zang.

“What if that relationship manager elects to move on and go to another bank or moves out of town? All of a sudden, your relationship with the bank is tougher now because you don’t know anyone else,” says Zang, senior vice president and middle market executive with KeyCorp, which has about 4,700 business clients with revenue from $5 million to $250 million.

Just as you need to diversify your business to handle economic ups and downs, you also need to make sure your relationship with your bank is broad-based and has several points of communication.

“Get to know more folks at the bank than just your relationship manager,” Zang says. “The relationship manager is still the critical component in the relationship. But as the quarterback of the relationship, they can help you as a business owner understand the organization more broadly. Broaden your knowledge of the organizational chart. It will help you understand the bank’s business philosophies, and it will help you understand how they make decisions.”

One of the best ways to get more in touch with your bank is to regularly have your banker visit your business so he or she can see what it is that you do every day.

“It’s very rare for meetings to take place at the bank,” Zang says. “We’re at our clients or prospects 95 percent of the time.”

That allows the bank representatives to see how you operate, how you create your product and how the service you provide is delivered to your customers.

“Being on the shop floor, it really makes the numbers come to life,” Zang says. “It helps us understand what we need to do to help them. We get out from the desk and get with our customers.”

To help you make smart decisions, your bank needs to know about the good things that are happening in your business, but it also needs to know about the bad.

“Communicate both good news and bad news as early as possible,” Zang says. “It provides time for the bank and the company to make thoughtful decisions together.”

Good news, such as landing a huge contract or learning of an opportunity to buy out your largest competitor, can often require just as much creativity and time as the phone call that says you’re going to miss your sales target by 30 percent.

“It’s the same in any business relationship you would have with any of your partners or any of your vendors,” Zang says. “The more you communicate early what your plans are and where you are going, the more you can get the positive impact of other folks’ thoughts to help you get to where you want to go.”

So how often should you meet with your bank?

“Most banking relationships are such high-touch, intensive relationships — you’re lending money back and forth — there’s always a touch,” Zang says. “But from a formal, ‘let’s sit down and talk about my business and where I’ve been and where I want to go,’ quarterly is very good for a company that is moving pretty quickly.”

And when a big deal is going down, you might want to meet every other or every third day for several weeks.

“A bank’s goal is to help you grow your business,” Zang says. “Knowing where you are taking that business helps the bank get you to where you are trying to get to.”

Grading your bank

One of the best ways to judge the health of your company’s relationship with your bank is on your bank’s willingness to speak with you.

“Are they willing to be a sounding board?” says Alan Zang, a senior vice president and middle market executive with KeyCorp. “Do they bring you ideas? If they never come to you with ideas or never have any suggestions for you, it may not be an unhealthy relationship, but it’s certainly not a relationship that is helping you grow.”

Zang believes that businesses should have a basic list of service needs.

“If you are doing a lot of business overseas, does your bank have the ability to help you with foreign exchange transactions?” Zang says. “Do they have the ability to negotiate import/export letters of credit for you? Or do they have to go through someone else?”

The importance of your relationship with your bank is such that price should not be the sole determining factor.

“Is price important?” Zang says. “Absolutely, it’s important. But in today’s environment, in particular, for a growing company, credit availability and structure and the bank’s ability to respond to your needs quickly and appropriately is far more important than price alone.”

HOW TO REACH: KeyCorp., (216) 689-6300 or www.key.com