The phrase "relationship banking" is commonplace these days, but what does it really mean and how do you create it within your bank. True relationships, at the end of day, are formed based on trust; and trust is created through confidence. So how do we establish both confidence and trust...FAST?

FAST is the operative word, as traditional relationship-building takes lots of time and money. But your window of real opportunity may be very small. In the business development context, the face time you have with a new prospect may be limited to one substantive meeting. In that one meeting, perceptions are formed. What we want is to create perceptions that move the prospect to action.

Find Your Common Ground

What is the one thing that is common between the business banker and his/her client? Yes, it's their financial statements, the one document that the banker and the client rely on to assess the performance of the business in question. Now herein lies the opportunity. What do the majority of small business owners do with their financial statements? Correct again, they place them in the drawer. It's a real pity, as those same financials represent: (1) a record of every decision the business owner has made over a given period of time. (2) A record of every transaction that has been made over the same period of time.

Tell Their Story
Imagine if the bank relationship manager could take those exact same financials and use them (with the aid of technology) to tell the prospect's story. The story would: (1) Encapsulate where the prospect has done well, i.e., illustrate decisions that have translated in superior financial performance. (2) Discover two or three areas in the prospect's business which, if focused on, could further maximize business performance, while concentrating on the three business engines: the profitability engine, the cash engine and the return on capital invested in the business. (3) Lastly, and possibly more importantly, take a look at what the future holds, how specific strategies will translate into future financial performance.

Imagine this all is done in an interactive way in less than an hour! The banker uses "client speak," demonstrating the above in language that the client really understands, establishing a dialogue in which the client can participate. What client would not appreciate the opportunity to discuss his business with his banker, focused on the objective of modeling potential improvement areas?

What Have YOU (the Banker) Gained?

Hypothetically, if the above could be achieved, what would this mean to your bank? (1) Instant confidence. The banker would become an ally, a part of the business team. The time spent would be considered valuable, with comments like "this bank really understands my business." You'll be creating the foundations for trust, and ultimately, a relationship. (2) First stage credit processing. The financials have already been spread, thus providing for the input required to conduct the credit application. This ensures work already done is not lost. (3) Identifying bank covenants. The interactive dialogue provides the capability to establish bank covenants if the loan were to be executed. The advantage of this is that the client can visually see that these same covenants, although good for the bank, are equally good for the client. (4) Internal bank understanding. The banker will be able to attain a quick feel as to whether the client is a bankable proposition, all within the same meeting. This brings us to another important point. By doing the business review with the client, it may be that the banker decides that the client's case is not a bankable proposition. (5) You still manage a relationship. Traditionally, if the bank's decision is that it's not a bankable proposition, the client would receive a letter saying "thanks, but no thanks." The problem is that in this scenario, your client's potential business is pretty much lost and so is that of his friends, family, etc.

With the Business Health Review method, this "rejection" can be managed as a positive. This is achieved simply by being honest. It is for "this reason" and "that reason" that we can't provide you with the required loan; however, if you make some of the improvements we were talking about, we would love to have this chat again.

This dialogue would place a very different perspective on the client's perception, with the real possibility of retaining a relationship and attaining some of the client other services, such as private banking.

Now THAT'S Relationship Banking...and Competitive Positioning
A bank deploying this methodology will establish a true competitive advantage by actually doing and being what it says, namely, "we are your relationship banker."

What is this methodology? It is simply the CBIZ Business Health Test - an interactive, unique one-page "scorecard" technique we use to quickly evaluate a company's financial position, detect hidden problems, and provide a firm platform for making informed business decisions and setting strategic goals.