…How do they develop effective products? Many lenders have large product teams with the appropriate level of junior, middle and senior management.
The collective wisdom is that these product teams use analysis of data extracted from their clients to create a product. All good, right? Everyone is happy.
If you’re a borrower, I have just one question for you. When was the last time you met one of these people?
The problem with many product development areas is that the collection of data – more specifically, the integrity of that data is often compromised. Cast your mind back to the last online survey that you completed – the surveyor usually promises that it will take no longer than 10 or 20 minutes. You have no input into the conversation except to answer predetermined questions.
The old saying “BS in, BS out” is true in this case.
They will argue that they have conducted surveys where questionnaires are designed to eliminate contradictory answers etc. Well, yes but…
It’s not quite the same as a conversation is it?
Bankers used to take their time to learn about clients. That was before they had to make their quota of client visits per week or risk the wrath of the KPI system. These “dinosaurs” are no longer wanted in today’s lending institutions. To be fair these bankers were highly experienced and carried approval authority. They also had the capability to structure a transaction to what the client required. Over time clients came to trust them.
They’ve been replaced by surveys, focus groups and bankers that follow the tick and flick policies implemented by senior management.
How often are clients frustrated because the bank has met them part of the way? They haven’t really given the client what they want – I’m not talking about risk here, I’m referring to poorly designed products that are universally applied across multiple industries and organisations. As part of the KPI’s of each employee is determined by them following these policies without question…well you see where this is going.
Not all that long ago, each transaction a banker executed was, in some small way, unique. A bespoke solution was put in place for the client. These days, in most banks, the best way to clear a room is to utter the word “bespoke”. That expression has been replaced with “tick and flick” – an invention that had its origins in manufacturing where a production line approach was used to keeping costs down. The collapse of the manufacturing industries in Australia has seen some of these clever engineers with six sigma master black belts apply their trade (usually as consultants) to re-engineering the processes of corporate banking.
Management rightly argue that bespoke transactions are expensive. Whilst I’m sure they understand the positive revenue implications – they usually have no authority to stray from the message being passed down from above them. The question that should be asked is “how expensive will it be if I don’t do the bespoke transaction before me?”
Next time you meet your banker ask him/her:
- About your business. See if they understand what you’re unique requirements are.
- How much authority they have.
- How much authority their general managers have.
If the authority of the banker and the GM is below your total facilities you will be at the mercy of tightly adhered to bank policies. Pray you don’t have a credit manager indoctrinated in a tick and flick approach.
If a banker tries to sell you a product ask them how that applies to your circumstances. If they can’t articulate the answer, then it’s you who has the problem.
So what do you do? Find an old school banker of course. Where? Contact a finance broker. You won’t find them in a bank.