Community bankers are facing a number of major challenges these days. New capital requirements have diminished returns to shareholders, while regulatory and compliance burdens have ballooned costs. The low interest rate environment has challenged margins and the rapid development and adoption of mobile banking has eliminated traditional geographic boundaries that historically kept competition at arms length.
With so many big issues looming, its easy for community bankers to lose sight of the basics of doing good business. But there are smart and surprisingly simple ways for community bankers to get their banks off the ropes and back into contention and they all come down to building relationships.
First, make sure that people of all levels within your organization are well-trained in having great conversations with your customers. Your staff needs to understand how to engage customers and earn their trust so that they can recommend products and services that address their needs. Id estimate that a significant portion of all new accounts opened at banks are closed within 12 months. Chances are those customers have been placed in the wrong account and encountered unexpected fees, charges or inconvenient account access. Disappointed and frustrated, they choose to leave.
Not only is this disastrous for community banks, its largely preventable. Bankers simply need to take the time to understand three basic things: how the customer likes to do their banking, where their deposits come from and how they plan to use the account. Then they can advise the customer about the best product for their needs. Bankers can also educate the customer about what fees and charges to expect and recommend the account access method that best suits their personal banking style. This conversation is essential to building a trust-based relationship.
A follow-up call or email to clients is also an extremely effective way to deepen that trust and ensure satisfaction by answering questions or resolving initial startup problems. This is an opportunity to learn even more about their borrowing needs. The more you know about your customer, the more you can help them now and in the future.
Second, keep your product offerings simple. This can go a long way toward building a trusting relationship with your customers, as complex products and fees are often confusing and intimidating. For instance, products that allow customers to avoid fees by maintaining an average monthly balance (as opposed to a minimum monthly balance) are often too complex for customers to manage with ease. Instead, consider waiving fees as long as customers keep a combined minimum balance across all accounts. Fewer, smarter options will help your staff be more confident about recommending a product or service; complexity leaves everyone guessing.
Bundling products that meet the specific needs of a client segment are also a great way to simplify. Young, busy professionals were early adopters of online banking. Consider bundling online and mobile banking, a debit card, e-statements, direct deposit and person-to-person payments into a single product offer for the type of customer who wants instant, convenient access. Conversely, while more seniors are using the Internet for shopping and email, many still avoid banking online. Be sure to provide a product package for them that reflects their need for tangibility, security and face-to-face interaction.
Make it simple and easy for your staff to open a bundled account rather than forcing them to cobble together multiple products. And make sure employees are proficient in all of your current technology so that opening customer accounts is quick and painless.
Community banks can only get ahead by getting back to basics. With the right talent and processes in place, youll be able to focus on the critical mission of building strong and profitable business relationships.
Tim Scholten is a veteran banking executive and founder and president of Visible Progress, a consulting group for financial institutions based in Columbus, Ohio.