Author: Clarke Farmer, CFarmer@ProfitStars.com
CEOs and Chief Lending Officers, have you ever met a young lender that seemed to see his/her shadow while out on a business development call? Then, just like the groundhog, that lender will retreat back to the burrow with nothing more than a prospect’s business card.
If so, then you are not alone. In the last 60 days, I had several conversations with bank executives in Minneapolis, Oklahoma City, Fresno and Atlanta on that very topic. We discussed the challenge of transitioning some of the bank’s credit analysts into commercial lending roles. As in most community banks, there simply isn’t much training and development infrastructure to accomplish this effectively.
We talked about transitioning from a focus on asset quality to the two-pronged challenge of growing loans while maintaining the asset quality “habits” honed in tough times. After so much intellectual focus on problem resolution, who would blame a young lender that fears the outside world?
Another challenge is driven by the most experienced lenders’ volume of portfolio responsibilities. These folks are so busy maintaining massive portfolios that they don’t have time to prospect and work on more profitable opportunities. The irony here is that they are the very lenders that have the “chops” to go get new business sooner than their less experienced peers.
There is no easy solution to report. Rather, I’ll share where the discussions are headed based upon a ton of industry experience and (perhaps more critical) the recognition that old banking habits need to change.
Less experienced lenders have spent most of their career analyzing credit or fulfilling requests from customers. They need to learn how to deliver valuable guidance to customers. Networking at Rotary and Chamber meetings alone won’t suffice. Teach them how to plan prospect calls. Teach them how to match your competencies with the customers’ strategic initiatives. Then, they need to communicate with the client in a manner that will influence outcomes.
Hold these less experienced lenders accountable for prospecting activity, substance and follow-up. You can’t make new loans sitting behind the desk. Talk about their prospecting calls to evaluate and coach on substance and effectiveness. Ask what they discovered about the prospect’s business initiatives and how the bank can influence their success. Guide them on follow-up strategies. Monetize the value of making a decision in a timely manner. Establish mutually agreed upon timelines. Hold the lender and prospect accountable to the timeline.
Deploy technology to manage all aspects of accountability: calling activity, engagement notes and effective follow through. There are many applications available to bankers today. Consider ProfitStars’ new Commercial Lending Center as a simple tool for this purpose.
Unless your bank is the only bank in town, its time to embrace incentive plans. The alternative is to continue living in a commoditized market. There, your only differentiating factor is the “skinny” deal your young lender just cut that will impair the profitability of your loan portfolio. Use incentive plans to attract and retain the talent required to execute on all of the above.
What are you doing about your groundhog problem?
For our clients: remember that your ProfitStars Commercial Lending Solutions team can assist you with sales/monitoring expertise as well as training/accountability.