Academic journal article ABA Banking Journal

They've Got Connections

Academic journal article ABA Banking Journal

They've Got Connections

Article excerpt

"ANY TIME A BUSINESS BEGINS TO resemble a commodity, Frost Bank begins to get itchy." So wrote Executive Editor Steve Cocheo in his cover story of Texas-based Cullen/Frost Bankers (p. 26). Over the years there has been a great deal of hand-wringing and warnings about the "commoditization of banking." With good reason. But here is a bank that has made it a strategy, almost, to exit business lines that have become commodities--mortgage originations, credit cards, and indirect auto lending being three recent examples.

CEO Dick Evans doesn't claim any special foresight for having largely dodged the current mortgage woes, the story will tell you. What he says is that relationships are what is most important, not transactions. And the mortgage origination business, as well as others he exited, had lost its ability to build relationships.

"Relationship banking" as a phrase, is right up there among the pantheon of banking bromides. But a bromide, by definition, was once a fresh, if obvious, truth, made trite by overuse. "Obvious truth" is the equivalent of "common sense"--they are neither obvious nor common to people busy looking for something more current, exotic or unique.

Take it away from a formal definition, and "relationship banking" really describes what it means to be in a service business, and isn't that what most banks are? If a bank employee can establish a meaningful connection with a customer by solving a problem or giving above-average service, then you have the potential for an association grounded on something more lasting than a single transaction or the lowest/highest rate. The stronger the connection, the more likely it will be to withstand the rigors of competing claims, or--apropos of current conditions--economic stress. …

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