If you’re feeling trapped in rate competition, you’re in “Commodity Hell”… and it’s not a fun place.
When your customers and prospects view you as no different than the bank down the street, you create a situation where retaining customers and attracting new ones is beyond difficult.
The first reaction is to blame the customers. You’ve heard it at banking conventions before. Someone will complain, “Customers don’t care about relationships anymore. It’s all about rates and fees.”
That’s backward thinking.
Yes, it is all about rates and fees if you don’t give the customer any other good reason to use in making their decision.
The constant “need” to match rates to win a deal is a symptom, not the cause of the net interest margin crisis in banking today.
The cause is much more profound.
It’s inside each of your lenders, and it may be inside of you. Frankly, it’s not your fault (or theirs). It’s unconscious and has been a limiting belief in the banking industry for at least 100 years (probably longer).
And don’t worry, if you’re frustrated with your margin, but feel you have to fight any way you can to keep the customers you have and get new ones,
Let’s get one thing straight. Low price IS a strategy.
And consciously or unconsciously, every time you match rates to win business, you’re saying, “Our strategy is to be the lowest price bank in our market.”
If you’re going to go the low-price route, at least make a conscious decision to pursue that strategy rather than have it be the result of dozens or hundreds of little unconscious decisions to match rate. And do it with the understanding of history.
Consider the history of the low-price strategy in business.
Let’s start with Sears.
Regulators and bankers have one common concern right now—get and keep deposits as interest rates go up. Sounds easy, but it hasn’t been all that easy just to get deposits when rates have been low, and so getting better at this immediately is important.
I’m going to cover five must-do-now strategies that you need to have happen pronto to make sure that you get and keep those deposits to weather this upcoming storm.
Make sure that your commercial bankers understand how to bring in million-dollar checking accounts.