I’ve been in lots of meetings in the past two weeks about bank to corporate relationship and the general dialogue goes that banks don’t understand corporates' needs.
What we want is for our bank to understand our business as well as we do, and make it work like we want. We want the banks to realise that they oil our machine and if they give us dry oil, then the machine breaks.
All well and good Mr. Corporate, but you need to explain your business to us better. We are trying to deliver good services to you, but you cannot expect us to treat all businesses as individuals.
That’s exactly what I want. You treat my business as unique. You give me a relationship manager, so why not let that person change and deliver the service the bank offers tailored to my way of doing business.
We do that, but the platforms we provide are generic. Therefore, the tailoring to you is based around pricing, fee structures and operations, rather than products, processes and technologies.
And there’s the problem. You treat a few corporate customers as unique – the largest – and then give the rest of us a homogeneous product, process and service.
I don’t think it‘s that bad.
Well, here’s one example. We’ve been asking for as long as I can remember for you to change the way you send us statements. You send statements to our Head Office but our treasury and finance departments are in our finance office which is 200 miles away. We have to forward all of your statements to us by internal courier which is a pain. Why can’t you change that?
Oh, it’s a systems thing.
That’s not good enough.
OK, I could go on, but the core of the dialogue appears to be the same as those we experience as individuals but on a larger scale.
So then I ask two questions:
1) What would make a corporate change their bank; and
2) Why can’t corporates work better together to pressurise the banks to change.
In the first question, corporates don’t change their banks unless they really have to. They tell me that most areas of banks services are not strong enough drivers to switch banks. The only real pressure comes from either having a bank that is stopping the corporate achieving their business goals, for example by being unable to connect them with suppliers or customers, or if a bank is creating issues in the corporate’s profitability through their charging structures.
The former tends to drive to the core of supply chains whilst the latter is more directed towards working capital. This is the reason why so much discussion takes place of these areas.
The second question is that corporates aren’t bothered about cooperating with each other unless it’s in their joint interests, and very little is in their joint interests unless it’s threats from regulation or bank cartel operations.
Hence, SEPA is of interest as are the new rules over OTC Derivatives, but little else would cause corporates to collegiate together.
And whilst corporate can’t be bothered working in unison to change bank behaviours, and whilst they won’t change banks unless the banks inhibit their supply chains and working capital structures, then little will change in the relationship between the two.
In other words, the frustrations of the corporate and the bank discussed in the opening, will always be there.