The title "corporate lender" has begun to disappear from the commercial banking nomenclature in favor of the term "relationship manager."

The relationship manager has significantly broader responsibility than finding, underwriting, and monitoring loans. Ideally, he or she is a coordinator of the sales process who evaluates customer needs, matches them with the bank's products and services, identifies the most likely selling opportunities, and brings in product specialists as needed.

Unfortunately, this is largely a fantasy. It is still a distant goal many banks have for relationship managers. Scratch the typical relationship manager and what you find underneath is a traditional lender. The relationship manager may sell cash management and other deposit services, but it is rare to see the sale of products from other groups in the organization.

We estimate that among their best small and middle-market customers, banks capture only a 5% to 10% "wallet share" of financial services business. For example, no more that 60% of small-business owners who maintain a commercial deposit account have their personal account at the same bank.

The gap between the intent of the relationship manager's job and its reality needs to be addressed quickly and decisively. Among the reasons: Many companies view lending as a commodity and not the basis for differentiating one bank from another. But to achieve growth targets, banks must emphasize wallet share over market share in many markets.

Few senior managers would argue against the importance of building customer relationships. Yet few banks are on the right path. There are four major reasons:

*Wrong messages. In a recent speech at a Robert Morris Associates conference, Norwest Bank regional banking executive Scott Kisting underscored the importance of communicating effectively with staff about noncredit products. He said banks need to "celebrate" these sales to the same extent they congratulate bankers for new loans.

*Wrong or meaningless measurements. A banker at a well-respected regional company told a story that is all too typical: He and his boss would agree on annual goals for credit and noncredit product sales, but during the year performance is never measured against those goals. And 12 months later, a new set of goals is agreed on, with the manager believing that he is fulfilling his supervisory role.

*Wrong products. Banks have not challenged themselves enough in evaluating noncredit offerings from the customer's perspective. Are their proprietary 401(k) investment options really as good as those offered by nonbank competitors? Have cash management or custody products been leapfrogged by others? Too many product developers are playing a game of wishful thinking when it comes to product assessment.

*Wrong people. Even after reengineering and downsizing, many banks remain dominated by traditional "good old boys," not aggressive and sophisticated financial consultants and salespeople. Upgrading relationship manager staffing, either by improved training or replacing personnel, remains critical to meeting market demands and exploiting opportunities.

Ironically, within the small-business segment it is a nonbank that best emphasizes the capturing of entire relationships. Merrill Lynch & Co. focuses on meeting customer needs as opposed to a product demand, and its people are rewarded for cutting across the organization to meet those needs, whether personal, commercial and credit, investment, or risk-control related. Through superior customer service, they are also skimming the cream off the market.

Bank managements must get beyond their delusions about relationship managers by giving them a clear focus and setting priorities. In the near term, a small centralized marketing unit can provide the expertise that individual relationship managers may not possess. Management must rethink, reduce, and in certain instances eliminate the relationship manager's responsibility for maintenance, monitoring, and underwriting.

Performance goals must be viewed as commitments. A higher level of incentive compensation will widen the gap between the total compensation of excellent and merely adequate performers. The alternative is to risk becoming a provider of commodities and increasingly irrelevant to the customer.

Mr. Wendel is president of Financial Institutions Consulting, New York.

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