For too many business owners, the only time they talk to their bank is when the owner needs a loan, or the bank is trying to push a product.
Community banks left this model behind years ago, instead focusing on relationship banking to build trust with their customers and provide products that those customers really need. And now, financial institutions of all sizes are following that lead, phasing out the old model and embracing relationship banking.
“In today’s world, the larger banks are trying to reach down to the community level, and community banks are trying to offer more complex services that were previously only available at commercial financial institutions,” says Karen Nelson, first vice president of treasury management at Old Second National Bank.
Unifying the feeling of a community bank with the services associated with large banks isn’t easy, as community banks struggle to raise the resources to bring on complex products and big banks struggle with customer perception to rebrand their institutions as accessible and local. And that leaves business owners with deciding whether the bank they’re considering as a partner can hold up both ends of the bargain.
Smart Business spoke with Nelson about how to find a bank that meets all of your business’s needs.
What features of a community bank should a business owner look for in a banking partner?
Relationship banking and the high level of service community banks offer are important to business owners. It’s that personal touch, and the local decision-making and custom business solutions. Now, with remote deposit capture, community banks have deepened their capabilities. They can provide full investment management with personalized service, a tailored approach to investing and trusted advisers.
Also, business owners can count on community banks to be there for them for years to come. There’s a sense of accessibility, honesty and understanding associated with community banks that drives businesses to do more than buy products from them. Owners should be able to rely on their bankers as trusted advisers who can help them grow their businesses.
What features traditionally associated with large financial institutions should a business owner seek in a banking partner?
Businesses looking for nationwide capabilities or more complex international banking services might choose a large financial institution with a global footprint. But even the largest banks are trying to do some community banking in terms of building relationships at local levels. They realize that in order to get the full ‘wallet-share’ they want, they need to provide top-notch, personalized service. All banks have to touch their clients even if that just means calling to make sure they are satisfied and to ask the simple question, ‘How can we help you?’
How can business owners find a bank that can do it all to meet all of their needs?
When talking to a banker, that person should be asking questions about your business and how it runs. How does your business operate on a daily basis? With what areas does your business struggle? What banking products do you have now? Are they working?
This conversation should precede any discussion about bank products. The banker should get to know you and your business. Listening is the banker’s job at this point not selling. After telling your story, ask the banker to share success stories.
And make sure you are speaking with a high-level person who will guide you through your banking relationship. You want to build a relationship with a decision-maker who can execute on your banking plan.
What challenges are financial institutions confronting as they continue to unite community and corporate bank cultures?
As community banks work to integrate more complex products that were historically only available at large banks, they deal with limited resources in the form of money, staff and the cost of rolling out a new product. On the other hand, large banks trying to reach down to the community level struggle to build trust with clients who see them as the ‘big bank’ and not as their bank. Larger institutions face a public-relations challenge to prove that they are accessible, hands-on and relationship-focused.
Meanwhile, business owners are very conscious about their dollars and how they are spending them. They will scrutinize all decisions and approach any business relationship with caution. For community banks with rich visibility in a region, trust and accessibility are already part of the corporate culture.
Why is it important for banks to operate with a community mentality, and how does that benefit business owners?
There is a general distrust in banks, but people do trust the people they know in their communities. They notice when they see the president of their bank out in the community. They like walking into the bank and seeing the president on the front lines and not hidden in a board room. When customers are out, they want to run into the professionals whom they trust to advise their businesses. That’s what being a community bank is all about. And for banks that are struggling to earn customers’ trust, the only way to build strong, long-term relationships is to revisit the basics of community banking.
In turn, business owners who seek out banks with these values will find satisfaction in building relationships with trusted advisers who will be with them and their business through thick and thin.