Have you heard your bank talk of how relationships are important lately? Probably, what you need to do – as you would with any relationship – is measure that talk against reality. If your bank has cut its cost to income ratio dramatically in the past decade, their services have suffered. So, how’s your relationship?
I’ve worked for a number of banks and all of them felt the need to restructure from time to time. Usually this means some disruption to clients as their relationship manager is changed. By the way, one of the biggest complaints from customers in my 30 years in banking occurs when you change their relationship manager. It doesn’t matter if the client is an institutional, corporate, commercial, private or retail client.
Another complaint usually occurs when a business has had a bad year. Very quickly, the relationship changes from one that’s friendly and informal to one that’s stern and formal. Breach notices, threats of recalling funding and irreparable bad blood ensue.
Time and time again, clients of banks complain about this and yet they stick with the bank. They feel they have no choice.
Obviously you can’t have a relationship manager for life, or can you?
Businesses need to re-assess with whom they want a relationship.
As banks transition from a relationship model to a process model they will be further reducing the number of customer facing staff. With the remaining staff members unable to cope with the added number of clients placed upon them, there’s no time like the present to re-direct your relationship away from banks and towards a third party. The banks are themselves happy to entertain the idea of an intermediary relationship manager because it’s less expensive than having a salaried relationship manager (sadly, it has become a game of which bank has the lowest cost to income ratio to appease the equity analysts).
What about your needs? Well, you have a choice. What if I told you that you can still have a long-term relationship manager that will act as your personal treasury department. They would do all your debt shopping for you and will usually cost you nothing. Sounds too good to be true, doesn’t it?
If you engage such a firm you will be able to reap the benefits of the strength of your business. They should be able to get you a better deal by:
- Negotiating a better price
- Negotiating better terms and conditions – particularly when it comes to covenants. Some banks like to have the option of exiting a relationship when your business is at its weakest.
If your business is not healthy, go and talk to this firm anyway. What do you have to lose? The banks won’t want your custom. These firms will assist by introducing you to non-bank lenders. This can often be the difference between survival and bankruptcy.
Who is this mysterious white knight? Finance Brokers of course.
The other benefits of appointing a finance broker are:
- If the business is healthy, you won’t get charged by the broker.
- You need never train up another relationship manager again. Ever.
- You provide your financials once – to the broker. They will do the hard work for you.
- They will keep the lender honest by always knowing what the best rates and terms are.
When banks start talking to you about relationships see if they can quantify it? What benefits are you seeing and what are they saying that you’re seeing? Is it important to you? Can you do better elsewhere. How’s your relationship?