Stop Matching Rates: How Top 5% Banks Command Premium Pricing Instead [VIDEO]

I’m telling you, I’ve heard it a thousand times. A CEO will say to me, “I am so tired of lenders walking into my office and saying, ‘Boss, I’m going to lose this deal unless we match the pricing.'”

Yep, this is true. At this point, it is true because they didn’t handle it correctly from the get-go. That lender got themselves into the position of having to match rate, and so yes, in fact, they’re in this mess. Maybe they can sweet-talk the customer into saying something like, “Well, you get me, and we have good people,” and maybe they can get twenty-five basis points more. But you can’t make a go of it and become a Top 5% performer with twenty-five basis points more on a loan deal, especially when you have desperate competitors pricing these things at crazy rates. And the deposit-rate competitors are just going through the roof on what they’re willing to pay. So margins are shrinking for those who don’t get it.

Don’t be that person. You need to be someone who gets it and understands we’ve got to have a four or even a five net interest margin—and it’s doable.

I can prove it. And you’ll meet many of these people when you come to the Best Banks in America™ Super Conference because there are many banks that are commanding well over a four net interest margin at a time when other bank CEOs are saying it can’t be done. And it’s true—they have a mountain of evidence. They really do.

Everyone is coming to them saying they have to match the pricing or they’re going to lose the deal. And it’s true. But there’s another mountain they need to climb: how to engage in those relationships correctly from the get-go so it doesn’t become about rate.

Listen, all you’ve got to do is watch the hard trend line. Dan Burrus, a dear friend of mine who is a futurist, talks about how being a futurist isn’t that difficult. He says, “Just watch the hard trend lines. They’ll tell you exactly where things are going.”

When I started this business, there were eighteen thousand banks. Now there are four thousand five hundred. I wonder where this is going. Yeah, we’re going to two thousand.

There are a lot of banks who are not nearly paranoid enough that they’re about to lose the name on the front of their door. They’re looking at the fact that they had a good year last year, which means nothing for this year because every year has its new challenges. Unless you pick yourself up and become a Top 5% performer among your peers, you’re always in a state of vulnerability.

So my buddy Dan Burrus talks about the trend line, and we’ve gone from eighteen thousand banks to four thousand five hundred banks.

We’re on our way to two thousand. There will always be two thousand great boutique banks that can command whatever premium pricing they want to and compete against all the desperate non-bank competitors.

And if you’re not on the path to becoming a Top 5% performer—one who can command four and five NIMs—you’re going to have challenges keeping your name on the door because we can see the hard trend line. We know where this thing goes, and denying it is not going to keep it from happening.

So please wake up to the possibility.

And here’s the thing: your team members will love you when you start commanding premium pricing because they’ll no longer feel like vendors. They’ll feel like partners, and they’ll love coming to work every day because, guess what?

It is fun to win.