The word “bank” is derived from the French banc, meaning bench, hearkening back to early medieval times when moneychangers and gem traders conducted their business face-to-face with their customers on a long bench. There was direct personal contact; business was based on mutual trust (or lack thereof). With all the current discussion about financial reform “so that Wall Street answers to Main Street,” it is also appropriate to examine banking on Main Street with small businesses in the neighborhood.
For small businesses throughout our country’s history have proven to be the most effective creators of permanent jobs in our society. Small businesses are the proven risk takers, innovators, and productivity enhancers that maximize the pursuit of and possible achievement of happiness for their owners, employees, customers, and clients. (Thus, it is not surprising that recent polling reported by the Economist reveals that over 60 percent of all Americans want to run their own business.) Encouragement of small business is especially important now in times of sustained double-digit un-(and under-)employment. Yet in order for small business to thrive, it must have a good personal banking relationship to smooth the flow of daily operations.
While recent news has focused on the challenges of small business to obtain adequate access to operate and grow, this post focuses on the more micro interactions that small businesses have with their bankers.
As most small businesses deal with their banks on a daily basis, it becomes imperative for a relationship of personal trust to develop the bank and its customer have a shared desire to grow wisely the specific business, and along the way have the company’s needs and concerns expeditiously addressed. This sounds so basic; in practice, it is surprisingly difficult.
It is increasingly difficult for small business and individual customers to develop long-term personal relationships with their banker, as banks merge and absorb each other like hungry amoebas, whose nerve centers are further removed from the customer with each acquisition. The surviving financial institution, sensing the loss of personal touch, have directed branch staff to be more welcoming, surrounded by strategically placed bowls of lollypops. Yet probe beyond the verbal saccharin and sugar, there is, all too often, a stunning display of ignorance of bank operations by its personnel.
For instance, in this electronic age of automation, tellers have little idea how to access related accounts, the branch manager too frequently has no further insight into a matter than to suggest calling the 1-800- customer service line, only to be placed on “hold,” and the so-called personal banker is often compelled to push favored products based on their capability of generating generous fees for the bank rather than what is best for the customer. In this age of instant transmission of information throughout the world, a check written on an out-of-town bank still takes three business days to clear accounts. There may be offered “free business checking,” but the naive small business customer beware: there is also a likely a schedule of fees well in excess of a hundred categories of possible charges. Banks are quick to alert in writing of a perceived failure to pay by a customer. However, when the same banks have erred as discovered by the customer, they will not admit in writing to such a mistake.
And with extended time interim of many bank mergers, who believes that two data systems, like two heads, are better than one? Their inability to achieve compatibility in a timely fashion seems almost deliberate, that is assuming the system is not “down,” preventing any information to be revealed to the customer. What happened to effective backup systems for these banks handling millions of transactions involving billion of dollars each day?
There are banking professionals who know their business well and, more importantly, know how to help small businesses successfully grow. Unfortunately, they are like diamond in the rough for the Main Street community. If banks really want to see Main Street thrive again, they need to develop more of their own “diamonds” and bring them back to the “bench” to face their small business customers eye-to-eye and curry trust and confidence. Only then will a small business have better chance to be a better business; only then will the servicing bank have a better chance of becoming a better bank.
Alex Beehler is the Assistant Deputy Under Secretary of Defense (Environment, Safety & Occupational Health) at the United States Department of Defense.