Setting Your Relationship Managers Up for Growth in 2024
Whenever a new technology emerges, people start imagining how
it will disrupt industries and transform human work. Sometimes, those
imaginings are driven by fear and pessimism; sometimes, they're bright and
hopeful about the future. History shows us that technology often helps humans avoid
tedious labor and focus on what they do best: building relationships with other
humans.
For commercial bankers, generative AI is getting a lot of attention right now. Some hope that it will unlock value and efficiency, while others see only the dangers. Although chatbots and virtual assistants give the impression of human warmth and intelligence, they can't substitute for genuine relationships.
If your institution is going to grow commercial relationships in 2024, then your relationship managers (RMs) will need to embrace the best of tech and the best of their humanity.
Revisiting the Fundamentals of Relationship Management
Because of the complexity of commercial banking, a high-quality relationship manager is indispensable. They bring many technical and specialized skills together into a high-touch, long-term client engagement. The balance of sales and support can be hard to strike, but it separates the best from the rest.
If your RM team is going to succeed in 2024, they need to master the fundamentals:
- Comprehensive Client Knowledge
They need to understand the particulars of a given client's business, the industry at large, and the relevant macroeconomic effects. The knowledge and experience that high-performing RMs command isn't something you can transcribe into a manual or code into a computer model. RMs should be encouraged to commit regular time to studying each client in their portfolio and the relevant micro and macroeconomic factors that affect their businesses.
- Strategic Planning
Prediction is a fool's game in most cases. There is one exception: preparedness is our best predictor of success. Your RMs should devote regular time to plotting scenarios and developing creative solutions for the most likely scenarios. This level of preparedness requires attention and effort. It also results in regular payoffs for your institution and your clients.
- Customer Relationship Management Software (CRM)
If you're still logging your portfolio and tracking pipeline in an Excel spreadsheet, it's time to embrace new technology. For example, a modern CRM system allows you to build repeatable processes, improve data visibility, and assess performance in far less time than manual methods. A CRM system that’s designed for relationship banking can help RMs manage their portfolios with fewer dropped balls and greater sales volume.
- Reducing Administrative Tasks
According to the Boston Consulting Group, RMs in US financial institutions can spend upwards of 60% of their working hours on administrative tasks. That's an egregious example of the Pareto principle, where your team could engage clients in meaningful sales or consulting work. Instead, they're pushing papers or mired in data entry.
Ask your team to red-flag unproductive admin work so that you can assess the best way to take it off their plates. Oftentimes, it’s as simple as tweaking a process or using technology to automate manual tasks.
- Compliance
Compliance will never go away. In fact, it only seems to be growing in importance, based on how much time institutions report spending on it. A recent survey from Alloy revealed that nearly all (93%) institutions find it somewhat challenging to meet compliance requirements, and they're hopeful that AI and machine learning (ML) can help automate the burden away.
Audit how much time your team spends on compliance and look for ways to reduce or offload those tasks.
Growth Is a Dynamic Process, Not a Rigid Formula
Humans need creativity and satisfaction in addition to consistency and challenge. This applies to the work of RMs as well. If you can empower RMs to serve their clients with creative solutions that drive value for their businesses, you're far more likely to keep them employed for longer.
There's no fixed definition for what makes a successful or happy RM. It depends on your institution and the clients in your service area. Take the time to learn about each of your RMs and where their strengths lie. This is vital to keeping them challenged and satisfied at your organization.
And it's easy to fool yourself into thinking that everything is fine. As David Catalano, Senior Vice President, Business Development at Baker Hill, said recently on our podcast, "A great RM can cover for a bad process."
If you're unwilling to investigate and fix problems, your best people will eventually leave.
Stronger Relationships Can Weather Tougher Storms
Commercial lenders have no illusions about what's happening in commercial real estate (CRE), but there's also an opportunity for creative institutions to grow their CRE portfolios and generate profit.
If you're seeing economic storm clouds on the horizon, don't lose heart. Now is the perfect time for RMs to redouble their efforts to serve and support clients. Economics and technology can transform industries, but they don't change the fundamentals of what makes a good RM.