Choosing the right bank is critical in today’s gloomy economic climate. As credit markets tighten, it is more important than ever to have a banking partner who can provide the financial resources necessary to grow your business.
Finding a new financial institution is not a task that should be taken lightly, however. It is important to be thorough during the vetting process.
“Get three reference names of a bank’s current clients and call them to see how the bank has been acting in these uncertain times,” advises Joseph Yurosek, senior vice president and regional group manager at Comerica Bank. “Also, get references on the individual at the bank that you would be working with. These are the times that you want to work with someone who has been with the bank for years.”
Smart Business spoke with Yurosek about selecting a bank in uncertain times, how to make a seamless transition from one financial institution to another and the importance of communication.
How should a business go about selecting a bank in uncertain times?
Business owners should make sure that they are keeping up with current events. They should spend time checking, probing and asking questions so they can be prepared for issues that could possibly impact their business. The days of ‘only relationships matter’ or ‘only pricing matters’ is changing dramatically. In today’s environment, knowing that your bank will be financially stable for the next two to five years is extremely important. We service the middle-market, and prospective clients of ours should be doing all of the due diligence that they might not have done in the past, even a year ago. Find out what the bank’s business is, what its capital position is, what its approval process is and get names for references.
Why is it so important to look for a bank that has a history of supporting its customers through various business cycles?
You want to make sure that the way the bank acts in good times is not dissimilar to how they will act when the economic outlook is not clear. You should look for consistency with people, bank decisions and, ultimately, a history of support, which would allow you to navigate through your own tougher times.
Once a selection has been made, what steps can a business take to maximize the relationship with its bank?
Companies should be following up with everything that was discussed during the courting or selection process. We make sure that we maximize our relationship with the borrower when we complete the courting stage and clients should do the same thing. Clients should make sure that the bank is following up on all of its promises, products and service levels that it indicated it could provide. Also, new clients should take advantage of meeting the bank’s senior executives. If I’m a client today, I want to know who I’m dealing with — in a business unit, in a credit function, on a product function — so I can gain all of the advantages that I need from the financial institution.
How can a company most effectively transition from one financial institution to another?
It is important to have someone who is paying attention to all of the details. The last thing you want to do — and I hear this from CEOs and comptrollers all the time — is go into a transition not having thought everything through. This includes the timing where you start depositing checks into your new account, the day you start writing checks against your existing account, the day you start sending wires out on your new bank account and the day you go into your branch to make your first deposit. You should spend time with the bank’s transition team and go through all of the logistics in order to ensure a smooth transition.
How important a role does communication play in sustaining a positive working relationship?
Communication plays a huge role. Any successful client-bank relationship is based on a partnership. The way to get the most from your financial partner is to communicate your outlook, your needs and the performance of your business — good, bad or other. Sometimes customers don’t feel like they should be communicating everything with us; they want to absorb it first. If they provide information to us early on, however, we can help them out earlier by providing suggestions and ideas in an advisory role. Customers should take advantage of the fact that banks have multiple clients, maybe in different industries, maybe with different organizational structures, but who might have faced similar issues. Banks can use the history they have to advise customers in meeting their needs. If the bank doesn’t know what’s going on, it’s tougher for it to deliver that service.
JOSEPH YUROSEK is senior vice president and regional group manager at Comerica Bank. Reach him at (714) 435-3998 or email@example.com.