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Turning Treasury Management Services from Free to Fee

Turning Treasury Management Services from Free to Fee

One of the biggest challenges Community Banks and Credit Unions face today is turning Treasury Management services from free to fee. Regardless of where our clients are within the U.S., they share a common frustration: bankers are giving the Treasury Management services away for free. It’s a “culture thing,” they tell me. We need to then change the culture by learning about TM services and valuing the depository side of the balance sheet.

If you have been given the monumental task to start, formalize, or “fix” your Treasury Management department, this blog is for you! Below are five steps you can take in the right direction:

Stop Waiving Fees!

The first step should be to simply stop waiving fees immediately. Stop the bleeding! Nobody expects to go to a grocery store and walk out with a free pound of best quality steak, just because the cashier chose to give it away for free. The same way, bankers should not give away these important and valuable services. Bankers should have a good business reason to give away a TM service and document the reason. I make the analogy to a “best quality steak” because TM services are very expensive services to provide, and you are missing a huge fee income opportunity. When I coached a client to quantify how much the $2 billion dollar institution was waiving on TM fees, the total came to $1 million dollars a year! Can you afford to give away this kind of money?

Educate Your Business Bankers on Treasury Management Services

It is imperative that business development officers obtain the proper training on all the available Treasury Management services your organization offers and possibly obtaining the Certified Treasury Professional designation. If your business model is to service small businesses and/or mid to large corporations, those businesses expect you to offer the more sophisticated banking services they need to run their businesses. If you expect to attract larger companies, then you must offer the depository products (the correct type of checking account that produces an Account Analysis Statement) and the Treasury Management services they typically use to help them manage their cash and streamline their operations.

Educate Your Business Clients on Treasury Management

Now that your business development officers understand the value of each TM service, they are ready to offer these services to your business clients. The same way they explain how the appropriate loan structure deserves a specific rate due to the risk exposure the institution carries, they should explain why there is a fee to use the right depository services. Incentivizing your sales team to sell TM services is perfectly appropriate if you want to compete for and attract larger businesses.

Understand and Embrace that TM Services Are Technology Services

It is crucial to understand and embrace that all the TM services your institution offers are, in fact, technology-based services. Therefore, you must support them as such. How do you support technology services? Start with keeping track of all the issues (“tickets”) related to each product. Track the resolution time and ensure complete customer satisfaction with the results—consistently. When you take this approach, then your customer service level will truly achieve “excellence” which is what every institution strives to provide.

It All Starts with The Tone at the Top

As with every strategic objective a Board of Directors plans to achieve, it all starts with the tone at the top regarding the TM services. The directive to formalize or start or develop your Treasury Management department must come from the Board. When your institution embraces the incredible value that each TM service provides to your commercial clients, there will be no question as to why you must charge for these services. You are now on your way to turning Treasury Management services from “free to fee.”

Community Banks and Credit Unions are in dire need to attract core deposits as a primary funding source and to increase non-interest fee income. Treasury Management is a “treasure” your institution must mine to not only provide your commercial clients top of the line TM services, but to also provide or increase your non-interest fee income.

Struggling with Treasury Management services and how they fit into your business service offerings? As always, we’re here to help.

When Planning for Leadership Succession, Focus on the Talent

Planning for Leadership Succession

During your strategic sessions, when planning for leadership succession, focus on the talent. Succession planning is on everyone’s top strategic objectives. And you must choose the right successors for each leadership position. The leadership team comprises of a variety of talent, skill, and experience. So how do you choose successors to the top-level leaders successfully?
Below are five talents to look for as you look for successors to the top positions of your organization:

The Talent of Leadership.

You can argue that leaders are born or made. I believe it’s both. The best leaders are those who are naturally good influencers of people which is the top talent to look for in your senior leadership team. Leaders take the initiative to lead. They are excellent decision makers with the information they have available at the time. They also own their decisions and consequences of those decisions.
Influential leaders don’t “tell” others what to do. They “coach” others to discover the answers for themselves. Top leaders must trust their employees that they know how to perform the job the company hired them to do.
Lastly, it is crucial to understand the difference between leadership and management. Leaders impart the vision to others. Managers execute the vision. Leadership is a talent. Management is a skill. The best leaders are also successful managers. Top leaders must be willing to develop their leadership talent and to enhance their management skills.

The Talent of Communication.

The talent of communication includes the ability to communicate well in every area and in a variety of ways. Good communicators are well spoken and can also communicate successfully in writing. They have the common sense to discern when an in-person conversation is better than an email or voice mail based on the circumstances. They choose words wisely to ensure others understand the message correctly and avoid misunderstandings or hurting other people’s feelings.
Excellent communicators listen well and repeat what others say to ensure they understood the message. Leaders who possess this talent mold their communication style to others’ styles to ensure a successful interaction. They take the initiative to understand the communication style of those they interact with and confront situations as they arise.

The Talent of Strategic.

Top leadership must be strategic about the future on how to direct the company’s endeavors. Collaborating with the other top leaders as a team, leaders make decisions that impact all stakeholders. People who possess the Strategic talent, according to the CliftonStrengths themes, create alternative ways to proceed after they explore at all the options.
Even when a company has a vision, without strategy at the top level of leadership, the company wonders around and does not accomplish its goals nor the vision. As a strategic team, they select members based on the knowledge gaps and needs of the team. It is crucial for the future success of the organization to choose the right successors for the top positions of the company.

The Talent of Includer.

Not one person can lead an organization without consulting and including the rest of the team—not even the CEO. Therefore, it is imperative for a Senior Leadership Team to look for leaders who include others in the decision-making process and that listen to others’ perspectives and points of view. Just as important, once a decision is made, whether everyone agreed or not, the team must support the decision.
According to the CliftonStrengths themes, those who possess the talent of includer simply “accept others.” Even though this talent is important, on one hand, the team must ensure the entire staff is represented at the leadership level. On the other hand, they must ensure that confidential information does not get out prematurely to the staff in an effort to “include everyone.” Doing so can present legal risks to the company if they share information that is not appropriate to be shared until the right time.

The Talent of Responsibility.

Top leaders must accept the huge responsibility it is to lead others. Some people only want the title but don’t want to take on the additional responsibilities that go with the title. Ensure your C-Level leaders embrace and own the responsibility given to them. They hold each other accountable.
Leaders with the talent of responsibility get things done. And precisely because they do what they say, they typically don’t understand others who don’t follow through. For them this is inconceivable. That’s when the communication gift comes in handy to understand others who don’t possess that talent and talk about it.
I will leave you with these related questions as you search for successors:

  • How deep is your talent pool? Could you find successors to the top leadership positions internally?
  • Are you focusing on depth of talent to include talent, skill, experience, and expertise to fill the open seats?
  • Are you looking for people who share your core values and the skills to match the business needs?

Succession planning is a great way to introduce new set of skills and expertise you may have been missing in the past. Therefore, when planning for leadership succession, focus on the talent. I hope searching for these five talents in your top leaders’ successors helps you form a successful team.

Books by Marcia Malzahn