Is the relationship you have with your bank really that different from your personal relationships?
Dating
The bank takes you out to fancy dinners, promises are made, and a dream is born. Your banker is always eager to come visit, tells you how great you are, how great you are together, and as treasurers, you believe you have found ‘the one’ that will make you happy. Things get serious and you introduce your mate to your parents. Your corporate parents play just as large of a role in selecting a bank as parents do in the selection of a mate. Do not overlook the need for parental approval. Approval is required on both sides because, in the end, parents are the ones who pay for the wedding.
Wedding
You sign the contracts, hand over your money, and go through the difficult task of moving in together. With your bank, you learn the online banking system, how to pull reports and set up wire templates. Weddings are expensive and establishing a new relationship with a bank is expensive too. This is why so many banks offer to ‘pay for the wedding.’ However, unlike monogamous relationships, banks are marrying multiple spouses and having to maintain hundreds or even thousands of relationships.
Honeymoon
Once the legal documents are signed, you go through the ‘honeymoon’ stage of transition and implementation, and you are still extremely happy with your choice of partner. Both parties are committed to the relationship. You pay attention to your relationship, and your statements, because everything is new and it needs to be set up just right. All errors or annoyances are addressed quickly. Life is good.
The Seven-Year Itch
One year goes by, maybe five, or even 10. You are so comfortable with your bank, and vice versa, that you stop paying attention to the little things. The fancy dinners are fewer, you start taking each other for granted, you get caught up in the daily routine, and only call one another with problems. You hear about a better bank elsewhere. Maybe you are being romanced by another who wants you to leave your partner to be with them. The cycle starts all over again. Some will choose to leave; others will choose to stay. Sometimes, just the possibility of leaving forces both parties to refocus on the reasons they originally chose each other. Adjustments are made and the world is right again, at least for a while.
Divorce
Our banking relationships last longer than our marriages. According to a 2011 study, the average length of time from marriage to separation is 8.7 years in the US. The average length of a corporation’s bank relationships is 10 years (AFP BRM Treasury Benchmarking Survey 2011). Though most marriages do not end because of money, it is one of the biggest things we fight about. Not enough communication with your bank can lead to restricted credit and conflict management is an equal indicator of relationship strength in marriages and banks. Changes made at the bank, either in lending or management, are a constant frustration to corporate treasurers.
Unlike traditional marriages, the contract signed with the bank actually has an expiration date, at least in terms of pricing, yet many choose to stay. It is possible that the value you are getting from the relationship is meeting your expectations. It could also be that you are comfortable and leaving is too much work. Banks should be competitive, accountable, and safe. Corporate portfolios must be profitable to the bank. Divorcing your bank can be painful in the short term, but may be necessary for your long term happiness.
How to Make Your Relationship Last
“Marketing yourself to a new person often involves being charismatic, clever and quick–but most jobs and most relationships are about being consistent, persistent and brave.” Seth Godin.
- Consistent by continuing to ‘date’ each other even after the contracts are signed and the honeymoon is over
- Persistent in your review of your relationship so that issues are discussed and resolved quickly and not allowed to ‘fester’
- Brave enough to consider new products/services or innovative ways to add value
How Redbridge Can Help
With more than 300 engagements worldwide over the past 20 years, we have the expertise to help you navigate the tricky relationship. Contact us today to learn how.