How to look for and identify the signs that it’s time for a new banker

There are signs that a company should evaluate its banking relationship in the hopes of finding a better situation. Among them are businesses that are experiencing a lack of communication with their banking officer, lack of feedback and decision-making ability, and the frequent transition of banking officers. 

“Sometimes a company might have had a good relationship with its banker, one that enables the company to get things done, then the banker leaves for another opportunity,” says Kurt Kappa, chief lending officer at First Federal Lakewood. “If the company then finds itself struggling to work with the bank’s decision makers, they may want to  consider asking to work with another banker, or switching banks entirely.”

Companies benefit from a partner that is proactive rather than reactive. It’s not ideal if the only time a company hears from its banker is when the company reaches out with an issue. They’re not asking to meet with the company to better understand the state of the business, talk through ideas and generally helping to inform the company’s strategic direction. Instead, they’re waiting for a phone call or worse, too busy to recognize they haven’t touched base with the company in awhile.  

“If you call your banker to address a particular issue and don’t get a call back for a couple days, there may not be a strong relationship there,” he says.

Smart Business spoke with Kappa about how companies can evaluate their banking relationship and the signs it’s time to move on.

What questions should a company ask when evaluating its banking relationship?

The first aspect of the relationship to consider is whether the company likes and trusts the person they’re dealing with. Does the company believe the banker has the best interests of the company in mind with each decision that’s made? Does the banker fully understand the business, its competition and the current industry landscape? And does the banker advocate for the business at the bank? It’s important for a business to have the right banking partners on their side, especially when their expertise and advocacy are needed to help the company get through difficult times. 

Once a company has evaluated its banking relationship, what are the next steps?

One of the initial considerations should be to determine if the bank can still complement the company’s strategy. Is the business working with a banker who can contribute to the company’s strategic plans, someone who has the right experience and knowledge? This isn’t to say that a company should switch banks if the relationship isn’t living up to expectations. The issues could center on the person with whom the company is dealing, and one person doesn’t represent everyone in the bank. That’s why a good first step is to look within the bank to see if there’s someone else available who better fits the bill.

However, there’s also a chance that the company might have outgrown its current banking relationship. The bank just might not be able to offer the rates and amortization structure it needs, making relationships, at that moment, a secondary consideration. If that’s the case, then it’s time to move on. 

How should a company use what it learned to find a better relationship?

Once a company has done its evaluation and identified the problems, a good next step is to start asking friends and professional advisers such as CPAs and attorneys who they recommend. It’s likely they know who in the community does what well.

Some banks are large enough and provide ample services, others can provide the hands-on relationship a company might be looking for. Which the company ultimately chooses depends on what’s important to the business owner, as well as what the company needs at that stage in its life cycle. What’s needed at one point in time might not be what’s needed later. And while some banks can grow with a company, others can’t. That’s why companies should regularly evaluate their banking relationship.

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