Risk Watch with Alberta Quarcoopome: The complex journey of a banker (2)

…The Relationship Manager

“Get closer than ever to your customers. So close that you tell them what they need well before they realize it themselves.”….. Steve Jobbs

Dear Readers, how did you find the extracts from my first article published more than ten years ago? Funny, but its real. Its interesting that the situation is still quite similar. The perception of young entrants in banking continues until the reality sets in. This week, I will continue with the complex journey of bankers at other levels, for example as a Relationship Manager.

The Relationship Manager (RM)

One pillar for success in banking is relationship management.  Relationship Banking is a strategy used by banks to strengthen loyalty of customers and provide a single point of service for a range of products and services. A Relationship Manager is sometimes referred to as the Customers’ “Friend”. Relationship management is the process through which a bank seeks to provide banking products that meet customer needs, risk acceptance criteria, and earnings thresholds. The key aspects of relationship management are:

• Maximizing earnings for the bank.
• Engaging customers and encouraging them to provide a share of their banking business to the bank.
• Understanding customers’ business needs & delivering products that meet their business needs at an acceptable price and quality.
• A good understanding of a customer’s risks to ensure that the package of products offered is appropriate and within risk appetite.

The above functions show that the job of a Relationship Manager is a complex one. The RM is expected to take a consultative approach with customers, getting to know their particular situation and needs and adapting to changes in their financial or business lives. Whether for an individual or small business, a relationship banker will engage in high-touch service to try to make their banks the ‘one-stop shop’ for their A-to-Z needs. This is a tall order for many Relationship Managers to take, causing some role conflicts when an RM become too empathetic towards the customer’s issues. Sometimes they are asked this common question; “Are you for the customer or for the bank?”

Costs & Benefits of Relationship Management

Do you sometimes wonder what the costs and benefits of the relationship banking concept are? A relationship management operating model enables the RMs to obtain a better understanding of a customer’s business operations, needs, and risks. This means that RMs are in a better position to recommend products that meet their customers’ business needs and identify new business opportunities and support requests for increased credit facilities – or one-off proposals that are outside their normal risk criteria. They also build good relationships with the key decision-makers, spot early warning signs of potential customer problems and deal with issues or complaints.
All these can help a bank maximize earnings from a customer relationship, but there is no guarantee that any income will be earned, and it is a costly process. Negotiating a package of facilities and getting this package approved can be time-consuming. There is also a risk that the customer may not use the facilities if a competitor offers a better deal.

Some concerns of Relationship Managers

• Heavy workload and stress
• Regulatory compliance
• Technology adaptation
• Customer expectations
• Sales targets and incentives
• Work-life balance

The “Bullying” Customer

Due to the financial savviness of some customers, Relationship Managers occasionally, find themselves being bullied by some of these customers. Relationship management is only cost effective where the actual income earned is sufficient to cover the relationship management costs. The direct costs are those related to the RM team (mainly salaries and premises), but the indirect costs of credit approval and loan administration also need to be covered. Risk costs, credit losses, and capital costs, which vary according to the risk of the customer and/or the product, have to be factored in. There are instances where a bank may find itself not earning any margin on a particular transaction with a corporate customer. In such circumstances, banks expect to recoup their losses in other forms. After all, the Pareto Principle still exits.

 

A Responsible Relationship Manager must Manage Customer Complaints

Without feedback from customers, first-line Managers and Relationship Managers will not know how bank services and products are faring. Relationship Managers must always be up and doing to ensure even the most basic customer complaints are attended to and avoided as much as possible. These problems may not necessarily be from the RM’s doing but he or she must understand the issues around the complaint and escalate to the respective department to be solved quickly. Sometimes RMs feel they carry the burden of all customer complaints! Let us look at examples of customers pouring their frustrations on RMs:

• Payment of stopped cheques. “Why wasn’t it done? I will sue your bank for loss of my money”
  • Wrongful debits on accounts…….”What is the case of such carelessness?”
  • Customers not informed of return of cheques deposited…”I would have followed up immediately to recover my funds. Why, is your SMS not working?”
  • Rude and unprofessional staff….”Some of your frontliners are not friendly. They think they are doing us a favour”
  • Wrongful dishonour of cheques……”I was expecting that you could call me and make an arrangement to pay”
  • Delays in responding to digital banking complaints…….”Is it out of sight, out of mind?”
  • Unexpected high charges and fees……”But that is not the product you sold to me!”

These are a few of customers’ pouring their anger on RMs. A responsible RM is expected to follow up on all complaints and keep the customer posted of developments. Many RMs sometimes find themselves working in a maze where they themselves might not have been adequately trained by the bank to act as “shock absorbers” or problem solvers.

Adding Value to Relationship Management: The African Approach

There are some more scenarios of Ghanaian origin that managers sometimes have to adopt to practice basic relationship banking the Ghanaian way. They have to meet their targets  to know their particular situation and needs and adapting to changes in their financial or business lives”. When we bring it closer home to us in Ghana, taking a consultative approach with customers is getting the KYC (Know Your Customer) right and learning the unique things about each customer and segmenting them. Each group of customers has unique characteristics, expectations and capabilities. We cannot have a “one-size-fits-all” approach to the way we handle customers. For example, if the branch is located in a cocoa-farming community, their culture will be completely different from a branch located close to a fishing community. Likewise, the prime areas like airport residential area branches in uptown Accra are different from branches in the crowded trading business center of Accra.

The Relationship Manager’s Dealings with SMEs.

It is not just the value RMs want to add, it is aligning with the business owner’s value drivers. Often-times, bankers are accused of abandoning customers after they have been convinced to open an account. They continue to move on with their “conquests”, looking for more accounts, forgetting the rest. Many SMEs in our parts of the world do not have proper long-term strategic goals. Some business owners just enjoy carrying the daily cash proceeds to their homes and counting the cash. It is therefore expected that relationship managers must get closer to their customers in a more structured way:

To understand a customer’s business the RM must enquire about the SME customer’s business strategy or goals for the next three to five years. Often times, they have difficulty answering questions about these goals, but some of the small business owners could be coaxed into sharing their vision with the RM, if they are approached intelligently. An RM must spend time learning first about the history of the business and its principals. In addition, the RM must delve into how the business works today and finally, develop an understanding of their current business and financial objectives.

Amidst all these complexities in the journey of an RM, there are many exciting periods where customers gradually have trust in the relationship, as their mutual goals are met. The work of the Relationship Manager is not all doom and gloom. Many great relations have been formed through seamless transactions, quick fixes of problems faced, business counselling, investment advice, proper credit analysis, realistic loan repayment schedules and prosperity for both the customers and the bank. On this note, I wish all RMs a happy banking relationship.

Next week, we shall examine another bank staff’s journey

TO BE CONTINUED

ABOUT THE AUTHOR

Alberta Quarcoopome is a Fellow of the Institute of Bankers, and CEO of ALKAN Business Consult Ltd. She is the Author of Three books: “The 21^st Century Bank Teller: A Strategic Partner” and “My Front Desk Experience: A Young Banker’s Story” and “The Modern Branch Manager’s Companion”. She uses her experience and practical case studies, training young bankers in operational risk management, sales, customer service, banking operations and fraud.

CONTACT

Website www.alkanbiz.com

Email:alberta@alkanbiz.com  or [email protected]

Tel: 233-0244333051/ 233-0244611343

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