Magazine article American Banker

Developing a Competitive Advantage in the Corporate Marketplace

Magazine article American Banker

Developing a Competitive Advantage in the Corporate Marketplace

Article excerpt

In the modern banking environment it is imperative that management think creatively about its relationships with customers and competitors, as well as examine new roles it might play in the marketplace. With the competition as intense as it is, merely following the crowd won't get the job done anymore.

To be sure, it takes a real commitment -- a commitment to developing a corporate, wholesale, business-to-business culture within the bnk. I'm not saying that you should reject consumer banking out of hand, but you do have to settle on one type of culture if you want a successful corporate marketing effort.

Now let's get down to specifics. I want to outline seven steps that I think are the keys to gaining that competitive advantage in the corporate marketplace.

* Be innovative:

We recently conducted telephone surveys of 400 corporate treasurers, and one result stood out above all -- they want credit officers to come in with an understanding of the company and its needs and talk to them about new products, not the old traditional product line.

To most banks, credit product development remains an overlooked concept. And that's a mistake. This should be a critical function in a bank, staffed by bright, creative product managers who can develop tailor-made credit products, products so different that corporate treasurers haven't even heard of some of them.

That allow a calling officer to go out and listen to a corporate treasurer's credit needs, then quickly meet those needs, both now and in the future, with innovative products that, in my opinion, will tie a corporate treasurer to your bank faster than anything else you can do.

* Stay close to the customer:

This sounds like a cliche, but there's actually more to it. This means looking ahead to the company's future needs, not just at what it needs today. Corporate treasurers are faced with two- and three-year plans, and they rarely encounter commercial lending officers who are willing and able to talk about anything but present needs. They want someone who can look at a company's income statement and balance sheet and project what a company will need down the road. In a word, they want someone who is proactive, not reactive.

That's what being close to your customer really means. Once you do that, you can present solutions to problems they haven't even anticipated.

* Develop the right attitude:

In contrast to retail banking, corporate banking has been plagued by old paradigms, or patterns, of how to do business with the corporate treasurer. If you'll permit the pun, these ought to be "paradigms lost," for they're not going to help you get ahead of the competition. What this comes down to is building an attitude within your bank that you can resppond to virtually any cusotmer need. In short, create a feeling of confidence.

This begins with the CEO spelling out exactly what type of bank you're going to be and developing the kind of people, products, and systems that allow you to really understand your markets and customers. Often, this includes creating a core of in-house specialists in certain industries who are willing to do their homework.

Then, after you've come to the customer with proactive, innovative solutions, you must continue to stay close to him and provide the after-market care. In order words, provide some service after the sale.

* Know your balance sheet, tax-free appetite, and structure:

This sounds obvious, but it's often not given due consideration. Since bank return on equity, or ROE -- the ultimate measurement for performance -- is a function of return on assets, or ROA, and leverage, you're essentially looking at return on assets as a way of improving ROE. (Leverage is simply under too many regulatory constraints to make it a viable long-term alternative. …

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