It may seem rich coming from someone who spent 16 years as a cash management banker to write this article but I have been on the other side of the fence now for over eight years so maybe you’ll forgive me for being the poacher turned gamekeeper.
Having helped many corporate clients choose and implement cash management bank relationships (for many years), it seems to me that banks (in general) make some fundamental mistakes when it comes to understanding and reacting to their clients needs.
Know Your Customer!
The phrase Know Your Customer (KYC) is much talked about in banking circles from a due diligence point of view, however, what I am referring to here is different. I am referring to the art of understanding your clients’ needs and wants, which I believe is a fundamental requirement of a good business relationship. A good business relationship must result in a win-win for both parties. For the bank, this will ultimately result in revenue generation and retention, and for the client this should mean service and value for money.
Clients appreciate their bankers more if they feel that they understand their business. By this I don’t just mean what business they are in but also what issues and pain points they are experiencing. To get to this level of relationship, the bank needs to spend time with its clients. From a client’s point of view, the best relationship manager is the one who has been in the job a long time, understands its problems and is always there when needed.
So how does a bank achieve this? As inferred above, the best relationship takes time to establish but one good way of helping this along is to show willing. Why not spend some time in the treasury department of your key clients? A day spent just observing and listening will be rewarded with a wealth of knowledge and goodwill. It is amazing what you will discover and learn. A good client will appreciate the effort you are making to understand his/her issues.
Why not call your clients from time to time to see how they are doing and whether there is anything you can do to help? It is surprising how many clients tell me that they hardly ever hear from their bankers. You need to get the balance right though and bombarding your clients with calls that are viewed as having no purpose will have a negative effect on the relationship.
Another great source of untapped knowledge on clients tends to be from different departments within the bank itself. Think about how many different people have contacts with the client at different levels and then think about pulling all that information together. Examples might be client administration or services, support, systems, capital markets, payments, etc. All of these groups will have knowledge of the client’s habits and issues and information on their current thinking and strategies. Tapping into this information source is a great way of understanding how the bank is viewed by the client.
The importance of establishing a good and sound relationship with your clients was previously mentioned but again, based on experience, it seems to me that there at least two different client attitudes to bank relationships. The first category I would class is those treasurers that view the relationship as pretty much one-sided and typically often driven by price. Cash management is viewed as a commodity where the only real difference between banks is the price they charge for their products.
The other category comprises those treasurers who see the relationship being broader than just price to include factors such as service, product offerings, strategy, etc. The advice to the banks is simple- find out what category your client falls into and then at least you will know what you are dealing with and what you should concentrate on to progress the relationship. The relationship strategy will be very different for each category.
Responding to a RFP Effectively
If a request for proposal (RFP) turns up from a client out of the blue then the reality is that you don’t have a great relationship with that client. The question must arise as to whether you should waste your time even replying to it! Assuming this is not the case, here are some pointers that as a bank you should remember:
- When answering the RFP make it easy for your reader (client) to evaluate it.
- Use the same template/structure that the client uses. Don’t create your own template because it’s better! Or worse still, because you are lazily cutting and pasting from another similar proposal.
- Answer the questions asked, not what you think should be asked. If you don’t understand a question then seek clarification.
- Steer clear of adding superfluous information, for example, sales literature, unless it has been asked for. This will not be appreciated.
- If a question is asked twice then answer it twice rather than simply referring the reader to the previous answer. Remember your audience. Often the client will have put together a team from different departments and the sectional divisions are split across the various experts for evaluation. Typically these experts will see only those sections that are relevant to them so make it easy for the client to review your proposal.
- Banks seem to have a tendency to make pricing as complicated as possible. It is one area where clients have great difficulty understanding and when they don’t understand they might assume that the banks are trying to hide something! You also risk the client overestimating the total cost of your solution because he/she has misunderstood the details.
- Remember that your client is not just evaluating your proposal but also those of several of your competitors. Think of the numbers of pages that they have to read and the time involved in this. Making it easy for your reader will pull them to your side.
- Avoid your own bank jargon and acronyms.
- Finally make sure that the proposal reaches the client in the form (softcopy, hardcopies, etc) specified and on time.
When Things Go Wrong
Many clients think that knowing the true worth of a bank is seeing how it reacts when things go wrong. There is no getting away from the fact that occasionally things do go wrong and everyone should accept this. The most important thing is how the problems are dealt with and resolved. If this is done quickly and honestly then it makes for a better long-term relationship with your client. The banker should remember that good communication goes a long way to mitigating the client’s frustration due to an error; silence in this case is certainly not golden!
Some of the above you will say is common sense but in my experience these oversights still occur far too frequently, so perhaps it is laziness on the part of bankers rather than ignorance that is the cause. If bankers realised the value of doing some of these ‘common sense’ things better, however, they would surely make more effort.
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