Businesses typically don’t jump arbitrarily from one bank to another. There’s usually a pain point, or a triggering event that causes them to look around.
In some cases, companies may outgrow their current bank, for instance after acquiring another company — the growth spurt pushing them past their current bank’s ability to support them — or a disruption in the business and the bank is no longer supportive. Sometimes, when it comes to products such as cash management, it’s a matter of a company feeling as if its voice isn’t heard by its bank.
“Businesses want service that is more personal,” says Wesley Gillespie, regional president at ERIEBANK. “For some, working with a large commercial bank can make them feel siloed — they can feel as if their bank isn’t willing to address their specific needs. That can sometimes trigger a company to look for cash management personalization elsewhere.”
Smart Business spoke with Gillespie about what to look for in a bank’s cash management services.
How might cash management services differ from one bank to another?
Commercial banks of all sizes tend to have the same core services — wire transfers, online banking, remote deposit capture, etc. How banks charge for those services and their willingness to provide custom solutions, adapt to their changing clients, and the tone and attention of their customer service, however, all differ.
Which bank is right for a business depends on what’s needed or wanted from a banking partner — whether that’s greater support, knowledge, customization, or products with greater functionality, better pricing or more flexibility in how they’re delivered. Some banks, especially those that emphasize customer service, will assign a relationship manager to their clients, which can offer clients a sense of being part of a team. The constant feedback can lead to customization as the relationship manager gets a better understanding of each business. The bank becomes a trusted adviser rather than a service provider.
What should companies ask banks about their cash management services?
There are a variety of questions to ask when seeking a new banking relationship. Some of those could include: Does the bank require a specific data format to get information, or can it be customized? Who will provide the customer service for the business’s account — a bank’s dedicated team or a third party? How are cash management service fees calculated and billed — à la carte or fixed? How often are service fees reviewed? How many layers of leadership are between the business and the bank’s decision makers?
Asking potential banking providers questions such as these can help make clear some of the complexity cash management services can have when trying to make comparisons across institutions. Ultimately, businesses should first determine what’s important to them when it comes to cash management services, then find a partner whose services are a match, or one that’s willing to cater to those needs.
Why consider cash management services when selecting a banking partner?
When a business is selecting a bank, they’re often basing their decision on the bank’s role as a credit provider. That typically means lending rates and terms are the focus. However, that might not be the most revealing decision point for the long-term success of the banking relationship. Cash management services serve a very important role in the day-to-day operations of a business. It can often be a regular touchpoint between a business and its bank, and one that reveals the bank’s ability to customize its approach to meet a business’s needs.
Credit and access to capital are just two elements of a healthy banking relationship. Cash management is just as important because it’s a mechanism that facilitates the daily movement of cash — a vital component of a business. In this case, the size of a bank doesn’t necessarily mean it can offer the ideal cash management solution to a business. Often smaller community banks are the most competitive by offering customized solutions. A partner that’s eager to work with a company and understands its market is more likely to offer solutions designed to meet a business’s unique demands.
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