Prioritizing Your Banking Relationship Can Deliver Big Results for Your Company
You would never just settle for “good enough” in your personal relationships. Your business banking relationship deserves the same standard of excellence.
The problem is that many business owners and CFOs don’t intuitively know how to determine their bank “soul mate.” Yet, the right fit with your business bank could save you tens of thousands of dollars over the years of working together.
Recently, a new business customer made the switch from a large national bank to Lake Ridge Bank. Let’s review some of the questions this business considered when researching their banking options. Hopefully, this real-life example can provide the framework for evaluating one of your most important financial relationships.
Does the Type of Bank Matter?
Let’s start by explaining some basic differences between bank types. First, there are two major categories of banks:
- Large national banks
- Independent community banks
While the names provide some clues to their differences, it is important to distinguish the scope and service model for each. In fact, one of the most common misperceptions about banks is that all banks are basically the same.
Not really.
A national bank usually has office locations throughout the country (and perhaps even internationally). For a global company with a need for massive resources and frequent international transactions, a national bank is probably the best fit. However, the priority for a bank of that size is profits, not local investment. For example, while national banks likely have local employees working in your neighborhood location, policies are created and decisions are typically made at the national/corporate level, where those local relationships don’t necessarily influence decisions or change minds. In short, you have no leverage.
Independent community banks differ in that we have a smaller, regional footprint with a mission of supporting local growth and development. While profits are important, our goal is more inclusive in supporting the people and businesses within our service area. We only succeed when our local communities also thrive. As a $1.6 billion institution, Lake Ridge Bank has access to ample resources to fulfill that mission, and community banks often cooperate for larger projects. Our bankers usually have local roots and long-standing ties to the area. Perhaps most importantly, policies and decisions are made at the local level. We can create loan programs that meet local needs, like when Lake Ridge Bank created a short-term loan specifically to help people recover from the widespread flooding in our area a few years ago. The relationships we build can impact financing decisions since we present your loan requests to our local approval board, who is likely familiar with your business and your role in the community.
How did this impact our new business customer in choosing to switch from a large national bank to Lake Ridge Bank – a community bank? Our local focus was an important part of their decision to make the change. Due to regular turnover at the previous bank, none of their contacts had any longevity or history with their business – no real relationship – which often required this business owner to repeatedly educate the incoming banker about his business and industry. Unfortunately, that unfamiliarity during a time of need also created some hefty and unnecessary fees.
What Does a Good Relationship Look Like?
In this example, the customer reached out to request information and learn more about what our bank can offer.
Ironically, a good banking relationship is not about what we can offer. It’s actually about what you need. During this initial conversation, it was more important for us to listen to their frustrations and begin to understand what this business wants and needs from its bank. That should be the first level of engagement with a potential customer.
It’s not about us…it’s about you.
Rather than giving a hard sell on why our bank is better, the first step in building a relationship should be an open discussion about your business goals and vision for the future. It is a patient process that should feel less like a transaction you check off of your To Do List and feel more like an exploratory courtship to determine a good fit.
In the case we have been following, our conversation lasted roughly six months and involved a tour of their facility and multiple phone and face-to-face meetings in addition to a review of the company’s financials. During that process, Lake Ridge Bank slowly introduced solutions to some of their most pressing issues. Beyond deposit accounts and online banking tools, the discussion:
- Explored whether our locations were convenient
- Explained the benefits of our treasury management services
- Determined whether Lake Ridge Bank’s and Wealth Management divisions should be included as part of the business banking team
We introduced the owner and management group to a team assembled specifically for their business based on the goals and vision they had shared. We built trust over time, so he knew what to expect and didn’t just switch to another bank with the same issues as before. We listened more than we talked.
What Are Some Additional Considerations?
In this situation, the business owner was determined to switch and was interviewing multiple banks to find the best fit. What made him choose Lake Ridge Bank?
- Similar mission and culture. Find a bank that feels like home and understands the way you work.
- Adequate resources focused on local growth. As the largest community bank in Dane, Rock, and Green counties, Lake Ridge Bank has ample resources paired with the attitude and personality of a community bank.
- Full-service banking relationship. In addition to traditional banking services, Lake Ridge Bank offers many tools typically associated with larger banks, such as treasury management, private banking, wealth management, and robust online/mobile technology.
- Personal attention for small business customers. In an effort to better accommodate businesses of all sizes, Lake Ridge Bank created a small business team within our Business and Commercial services. With a core value of supporting local growth and community development, Lake Ridge Bank recognized that many small businesses take a backseat to the larger business clients at any bank. We took a different – unique – approach by creating a group of bankers who focus solely on those small-to-medium clients.
- A history of helping other local businesses. Ask around. Does your bank have a reputation for serving local businesses? Try to find testimonials.
- Ease of transition. Without a doubt, there are some logistical headaches with changing over all your business accounts. We help with this process as much as possible to make the change a positive and productive experience.
The most important thing to remember is that your business banking relationship should go beyond information about rates and fees and performing transactions. It should be about how well a bank understands your company and ways we can support you through every stage, phase, and cycle of your business life.
If you want more information about building a relationship with Lake Ridge Bank, contact one of the helpful members of our Business team today.