Are you a business developer or a relationship manager? That is a question every business banker should ask him or herself. Why? Because there is confusion about what these two roles do within a community bank or credit union. We’ve seen various titles for this job such as commercial lenders, commercial bankers, business bankers, business banking officers, and others. However, the actual role performed by individuals in those roles is different based on the person’s sales skills, experience, and personality.

There may be many business bankers or commercial lenders, but few are “rain makers” – those who are out there selling every day and bringing in the net-new business. I propose there are two different roles: The sales roles and the relationship manager role. And there may be a team arrangement that works better than the one your institution currently has in place.

Let me explain. Community financial institutions share the following challenges regarding the sales role in their organizations (especially in rural areas):

The challenges community banks and credit unions encounter:

• Many commercial lenders/bankers, business bankers, business development officers (whatever their titles), are not producing net-new deals every month. They are the highest paid staff in the organization and are paid to bring new business into the bank. Yet they are not going out to sell. Instead, they are “order takers” and prefer to stay in the branch waiting for businesses to come out of nowhere. These same employees are excellent lenders and relationship managers.
• Because it is very difficult to attract and retain talent in rural areas and small towns, community banks and credit unions feel stuck with the business bankers they have. It’s a catch 22! If they let go of the current talent, it may take several months to rehire that position. If they keep the current bankers, the lack of net-new sales remains.
• There is no sales culture. In fact, many bankers are either terrified or at least against the four-letter-word: “sell.” The non-sales culture must change. But not to the extent of certain large institutions where some abused the system and took advantage of customers. There is a balanced approach for community banks and credit unions that is appropriate and well received by customers.
• But the biggest challenge we’re seeing is with family-owned banks. The ownership does not want to or does not know how to keep the bankers accountable. There have never been consequences for not bringing new business to the bank.

Below are three ways to address this important issue at your institution:

Establish Accountability

Measure the sales team by using incentive compensation plans with goals and performance reviews to assess results. In fact, one of the questions that leadership should ask bankers in these positions is: Are you a business developer or a relationship manager? Do you believe you are in the right role based on your sales skills, experience, and personality? Below is a grouping example of incentive bonus compensation plans for the various areas of the institution:

1. Senior and executive leadership
2. Business sales staff (business bankers, commercial lenders, commercial bankers, business development officers are all the same role: sales)
3. Relationship Managers. Maybe it’s time to think of a separate plan for relationship managers who don’t sell but take care of the customers well. They can have their own goals or be part of the team approach incentive compensation.
4. Retail sales staff
5. Support staff

Incentive Compensation Bonus Plans need to have an organization-wide goal, then branch goals, team goals (for a sales team approach) and lastly, individual goals. It is also wise to include a subjective piece that includes the employee’s behavior and team relations.

Use a Sales Team Approach

We’ve seen the team approach work very well for some institutions. Each team has one rain maker who is always out on calls and bringing in net-new business. They don’t underwrite their own loans, and some don’t keep a portfolio. Their role is purely sales. The in-house relationship manager becomes the ongoing “maintainer” of  relationships with the ability to cross-sell other services. This team has one credit analyst to work with both the rain maker and the relationship manager. Separately, loan operations and loan documentation support this team in the entire lending process.

Establish a Balanced Sales Culture

Selling is not bad. In fact, without sales, companies would not exist. Each institution must find the right approach to their sales culture. Employees at all levels should be trained to identify customers’ needs and match them with a banking product. Or at the minimum, refer the customer to the right person in the institution. When you approach sales as simply meeting your customers’ banking and financial needs, there is no shame. It is fulfilling when you see the results of how you helped each business flourish because of your banking services.

Conclusion

There is no perfect answer for each community bank or credit union to address the issue of bankers not selling. But there should always be accountability in place to ensure all employees perform their role. If you are in the role of business banker or commercial lender, ask yourself this question: Are you a business developer or a relationship manager? It is okay to be one or the other based on what you enjoy most and do best. But ensure you are in the right role as that will bring success to both you and your institution.

Looking for ideas to expand your Treasury Management reach to new business customers? Look into the TMClarity Framework, our comprehensive and transformative training and Treasury Management business management system that leads to greater sales success, higher margins, and increased customer retention in a competitive marketplace.

There are more than five benefits of Positive Pay services to your business customers. But in this blog, we focus on the top reasons community banks and credit unions must offer this important service. Let’s start by defining what is the Positive Pay service.

What is Positive Pay?

Simply put, Positive Pay is like the fire insurance on your home you hope you never have to use. For businesses, it’s their assurance that only the checks they write and only Automated Clearing House (ACH) transactions they initiate will be paid by their institutions. Any checks or ACH transactions not authorized by the company return unpaid. The financial institution then files a “Suspicious Activity Report” (SAR) to alert government officials about the fraudulent transactions.

Technically, the business uploads a file with the list of checks to the financial institution. The institution matches items clearing against the authorized list and alerts the business of any discrepancies. The business then decides which items to pay or return. That is Regular Check Positive Pay. The Reversed Positive Pay, the institution initiates the list of items clearing that day. The business then tells the institution which ones to pay or return.

Below are five benefits of “Positive Pay” services and how they benefit both the businesses and institutions:

Check and ACH fraud is significantly lower.

The Financial Crimes Enforcement Network (FinCEN) issued an alert to financial institutions in February 2023 about the alarming increase of “mail theft-related check fraud.” (FIN-2023-Allert003) Financial institutions must be vigilant in identifying and reporting any activity related to check fraud. And it’s happening the old fashion way—checks stolen from the U.S. Mail!

In talking with our clients, they are also experiencing an increase in fraudulent ACH transactions. The good news is that there is help! Financial institutions can offer the Positive Pay and ACH Positive Pay services for businesses to protect them from both check and ACH fraud.

Positive Pay protects both the businesses as well as the financial institutions.

As one can imagine, implementing this service on business checking accounts can save businesses millions of dollars. In addition, one fraudulent transaction can cost a business a monumental amount of time researching and closing old accounts. Once a business experiences fraud, the institutions require them to close the affected accounts and open new ones. This creates a huge amount of work for both the business and the institution. Implementing Check and ACH Positive Pay services on the main business operating account always pays off.

Increased internal controls for businesses.

A bank client once shared that a business customer used to “pre-sign” checks and leave them with his bookkeeper. During his vacation, the owner called the bookkeeper and asked her to issue a check as a matter of urgency. The bookkeeper happened to also be out of the office. She asked her assistant to “go to her desk and open the drawer where she would find several pre-signed checks.” The bookkeeper’s assistant issued the urgent check as requested. But she also issued a check payable to herself for $3,500.00!

When the check cleared and the customer found out about the fraudulent check, he contacted the bank in a panic. Guess what? The bank was not liable for this fraud and the customer had to absorb the entire loss. The bank offered this business customer the Positive Pay service and he declined it. The business owner pre-signed a legitimate check. Therefore, although the check was not fraudulent, the employee committee check fraud. If this customer had Positive Pay, he would have found out the very next morning and the check would not have been cashed. Small Businesses are notorious for not having internal controls in place and Positive Pay forces them to implement minimal controls.

Increased non-interest fee income for financial institutions.

Financial institutions are starving for additional non-interest income and Treasury Management (TM) services precisely bring that! Positive Pay is one of many TM services that businesses can benefit from. But all these services cost money to implement and to support. Therefore, institutions should charge business customers appropriately. Unfortunately, that is not the case. Most community banks and credit unions give it away for free. They should ask their business customers if they give away some of their products to their customers. I guarantee they would say “no, of course not”!

An opportunity for financial institutions to partner with businesses in the fight against crime.

The goal for business bankers should be to become partners with their business customers. Community banks and credit unions have an incredible opportunity to do so by offering Treasury Management services to their business customers. However, bankers must receive training to understand and value each service that helps businesses succeed. TM services allow businesses to accelerate their receivables, control their disbursements optimizing their cash flow management. In addition, TM services like Positive Pay protects businesses from losing money and time due to check and ACH fraud.

There are more than five benefits of “Positive Pay” services  to business customers. I hope these top five benefits encourage your institution to share the value of Positive Pay with your business clients. They will then consider you a valuable partner in their business.

Looking for ideas to expand your Treasury Management reach to new business customers? Look into the TMClarity Framework, our comprehensive and transformative training and Treasury Management business management system that leads to greater sales success, higher margins, and increased customer retention in a competitive marketplace.