Picking a commercial bank is a bit like choosing a spouse. In both cases, you will be picking a partner who will be with you through good times and bad, who will be privy to your business’s innermost financial dealings, and who can give the kind of advice and support that usually is received only from a long-term friend.
Smart Business asked David J. Janus, president and CEO of FirstMerit’s Cleveland-area office, about the banker-business relationship as it applies to the commercial market.
What should a business be looking for when choosing a bank?
Relationship, relationship, relationship! How do you define relationship? Assuming a small or medium-sized privately-held business, the owners and professional managers of the business must know the banker, their team leader and the next level up of management, and the credit officer. We rely on the people we know who represent the organization we do business with. It’s as simple as that. If you don’t know the people representing the bank, you have no relationship.
On the hard-dollars side of the question, outstanding customer service at a competitive price is one of the key factors in choosing a bank.
What kinds of things are most important to a business in today’s market if it is looking for a new bank?
Again, relationship, relationship, relationship! Most banks have the same or similar products and services. How you differentiate a bank is by the relationship. Does my banker keep in touch? Is the banker just pitching product or is the banker a ‘businessperson who happens to work at a bank?’ Does the banker really understand my business?
Look for a bank with access to capital to fund operations and growth of your business model. You want a relationship manager with experience … someone you won’t have to continually educate about your business.
If there are parts of an existing relationship that need to be fixed, how does one go about working this?
Tell the banker that you’d like to have a ‘relationship review’ with all of the product partners with whom you do business — including credit. It’s a great way to all get on the same page and to have a candid discussion.
When you go into a relationship, figure out quickly who the decision-makers are. Who is your advocate in the bank? If you don’t have one, get one. Make sure he or she is high enough up the ‘food chain.’
Should the size of a banking partner vary depending on the size of the business?
Good question. I’ve worked for very large, large, medium, and smaller banks. You want to work with a bank that can meet your needs. The bank that can lend $1 billion in foreign currency and issue debt for customers in Europe is not what a small or medium-sized business needs. Multi-national companies require multi-national banks; small and medium-sized businesses do not.
In fairness to big banks, though, that doesn’t mean they’re not capable of helping companies that are not multi-national. The decision for the business owner then becomes, ‘Am I going to have a good relationship with this bank and am I going to get to know the decision-makers?’
Really, though, the size of a banking partner matters only on the very large end of the market.
How does a business go about a needs assessment when choosing a bank?
You have to ask yourself and your financial people what’s working and what’s not.
Can one get assurances that they’ll be dealing with an experienced banker, not a rookie?
You need to know more people at the bank because things will change over time.
What is the value of a local banker against a big-capital bank that might be out of town?
A local banker suffers the highs and lows of the economic cycle with you and your business. He or she has more at stake because he/she has a home here, belongs to the same church, school and community groups. You know the decision-makers and they know you.
How long should I expect it to take before a new bank is up to speed on my business needs?
It is important for you to be up to speed prior to changing.
DAVID J. JANUS is president and CEO of FirstMerit Cleveland area office. He has 28 years of commercial banking experience. Reach him at (216) 694-5658.
