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Five Biggest Benefits of Specialized Lending- By Ray Adler
Benefit #1: Positions You As An “Expert”
Having industry or specialized lending expertise automatically differentiates your bank from the competition by virtue of the fact that you possess a greater breadth and depth of knowledge and experience. When lenders can discuss how they have assisted other companies within that industry to overcome similar financial or business issues, the perception created is you have industry specific expertise. Make no bones about it, “expertise”, be it industry specific or lending specific, has real value, value for which many clients are willing to pay a slight premium.
Benefit #2: Greater Return On Your Business Development Activities
Focus remains one of today’s most powerful business strategies. Given the many competing priorities bankers manage during any given week, achieving a higher return from the time allotted to business development is crucial. Working targeted niches leverages your bank’s existing relationships and allows you to gain access to prospective customers. . .by referral. From experience, we know bankers receive referrals passively by virtue of the excellent customer service they provide. However, this is a small percentage of the referrals that are possible. This is because few bankers are
proactive about utilizing their existing clients to ask for referrals. Once your bankers become proactive at asking for referrals, they will enjoy a much greater return on the time they allot to business development.
Benefit #3: Ability To Forge Greater Customer Loyalty
With industry specific expertise and a more focused approach to business development, bankers are able to spend more time forging deeper customer relationships. Since few bankers have weekly business development plans, they occasionally spend time meeting with prospects that aren’t necessarily great prospects. Specializing within certain industries or a given product niche allows bankers to pursue fewer but higher quality banking relationships. This gives them more time for meeting with customers and expanding each relationship in their portfolio. And with a national average cross-sell ratio of 1.9 products per relationship, clearly banks aren’t controlling much of the actual “financial relationship” - be it a business or personal relationship. So by focusing on the quality of relationships over the quantity, more time can be spent with customers, which translates into more products utilized per relationship and greater customer loyalty.
Benefit #4: Achieve Higher Margins
Much of the “rate sensitivity” perceived in the market is because A) most bank advertising focuses almost exclusively on rates. So in essence, banks have created the very rate sensitivity you hear lenders complain about, and/or B) bankers traditionally do a mediocre job selling value. The bottom line is pricing becomes less of an issue the better a banker is at selling “value.” As I stated earlier, industry or lending specific expertise has real value. . .provided your bankers can articulate that value in the form of
true benefits personalized for each customer. The challenge is that most bankers sell the features of your bank and its products, and seldom convert those features into real customer benefits. When bankers focus on selling the benefits that come with a relationship with your bank, including industry or lending expertise, higher rates and fees are achievable.
Benefit #5: Attainment Of Annual Production Goals
With all of the demands on bankers today, working harder promises little gain in results. However, working smarter does. We’ve seen this time and again. By developing an expertise, be it lending or industry specific, you inherently develop a focus. With that focus, you now must make some decisions about how you spend your time developing business. This may be the most valuable by-product one achieves from the process of specializing. From those decisions, you focus on bringing higher quality relationships to the bank. With higher quality relationships, a lender can invest more time into expanding each relationship and leveraging them for referrals. The result is the attainment of a lender’s annual production goals.
Click here to read Article #2: Eliminate The Two Biggest Productivity Killers In Your Bank
To learn more about this topic and how BTI can bring value to your bank, please contact us.
- Ray Adler