One of the buzz phrases that has returned these days is "relationship banking."
Gone are the days when a bank would charge a corporate customer for each service it used, figuring: "If their balances show they're overpaying this month, don't tell them."
With all the alternative sources of bank service and nonbank credit, banks need to be a little more generous than that.
Gone too are the policies that involved requirements of generous balances behind loans. These have been replaced by a willingness to be compensated entirely with fees, which is usually far cheaper for the corporate treasurer.
Some banks have swung even further in recognition of how much their power over large corporate customers has declined as commercial paper, finance companies, investment bankers, and other competitors have taken over much of the traditional credit market.
These banks have simply resigned themselves to concentrating on the middle market and the individual consumer, because competition in these spheres is not so intense.
But more aggressive banks have decided that to counterattack, they must change their policies. They are catering more to corporate treasurers, trying to understand what they want and need.
Sure, they are pricing services in a way that gives corporations the benefit of the full value of the funds they leave in the bank. This is a basic of relationship banking today.
But good relationship banking goes further. It involves an understanding of what bank practices are annoying to corporate treasurers.
Wasting Time
They complain, for example, that bankers sometimes call them up with nothing in mind to justify taking a treasurer's time.
"Don't come in and say, |What can we do for you?' Say: |Here is something new we have to offer; do you think it would be of value to you?'"
In a similar vein, treasurers report that they are annoyed by bankers who neglect their homework by failing to learn about the operations of the companies they are trying to serve.
"How can you take seriously the cash management proposals of a banker who does not even have a rudimentary idea of the geographic extension of the company and what its cash management needs might possibly be?" is a common plea.
The lack of knowledge goes down even further. Bankers often make their calls to the wrong people.
For example, they may go to a corporate treasurer who has no role in bank selection and usage, only to have the treasurer then call the company's bank-relations manager and ask: "Why did that turkey waste my time? Why couldn't you have handled him?"
What impresses a corporate treasurer?
One thing that doesn't is sloppiness - even when it leads to the bank's not charging for services that should be billed. "If they are sloppy with their own operation, they will be sloppy with mine" is the feeling.
Believe it or not, many a corporate treasurer is unhappy if the bank underprices for services, or overcredits balances.
"I don't want the bank to give me a great deal and then find out a year later that it is losing money on my account," treasurers say. "When that happens, it will either reduce quality, charge me more, or even give up the account. In any event, my profit plan and operations win suffer.
"I'd rather pay what the business is worth and have confidence that conditions will not be changed."
A Sense of Stability
What about the account representative who works with the treasurer? Treasurers want more than responsiveness, attentiveness, professionalism, skill, and flexibility. They also want to know the rep will be around next year.
Other important considerations: Do the people assigned to the company have experience in its field of business? Do they have enough status in the bank to get things done?
Relationship banking also involves having people assigned to the account who get along with the customer's CPA, its lawyers, and - something often forgotten - its bank-relations people.
Sure, the treasurer wants a banker who will be there when needed and has the capacity to meet the company's credit needs. But many banks can do that.
The one that makes the best corporate partner has professionalism, a personal touch, and a willingness to go out of its way to understand the customer.
