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Are you in the wrong business?

You’re not in the banking business, banker

Are you in the wrong business?

What is that supposed to mean? Simply that if you think of yourselves as being in the banking business, you’re looking down the wrong end of the telescope. A successful business person, now retired, said to me recently, “Banks are not in the banking business. They’re in the service business.”

His point is that whatever line of business you’re in—a manufacturer of aircraft components, logistics support, publishing, coal mining, or financial services—you’re in the service business. That’s because all businesses have to find, and then serve, customers. Even if you have a unique niche or product, you can still fail to capitalize on it if you don’t provide good service to your customers.

People may overlook poor service for a time if a restaurant or new app is so hot that they have to go to it, or have it. But in a business like banking, where most products and services are offered by all players in the business (and many outside the business)—commodities, in other words—the differentiating factor is service.

Fortunately, service is a rich vein to mine, with many nuances and variations. You have courtesy (a fundamental), convenience, responsiveness, knowledge, ability, initiative, extra effort (pushing to get a response to a customer ahead of a meeting), a “good attitude,” clear and timely communication (another fundamental), patience (worth more than gold), and much more.

Even in support functions, employees are serving other employees, who are dealing with customers directly or indirectly. (Okay, some regulatory chores may be a stretch, but for the most part the point holds true.)

I’m sure many bankers get this point, but having been an observer (and customer) of the banking business for some time, I would say that the tendency of bankers is think first of being in the banking business. It’s logical enough. You have to get the underwriting right, make prudent judgments about products and pricing, satisfy the regulators, and so on—it’s a demanding profession. Not everyone who masters the more technical aspects of banking has the same grasp of the importance of service. But the best bankers understand both, or at least they ensure they have both types of people on board, and take steps to keep the two in balance.

My recent visit to FirstBank Holding Co., Lakewood, Colo., for the October profile of incoming ABA Chairman John Ikard, the bank’s CEO, confirmed the value of an intense focus on service. Without taking away from the article to come, suffice to say that the bank’s first CEO, the late Roger Reisher, a Colorado business icon, said things like this: “Do what the customer wants, not what the bank wants.” He told colleagues that he didn’t see much desire among banks to serve the customer in such things as convenient hours and returning phone calls promptly. It’s still important even if you change the words to “convenient web banking and responding promptly to texts.” 

If you went only by bank advertising, you’d think that all banks offer superlative service. As always, the doing is much harder than the saying. Especially over the long haul. But if you can pull it off, the rewards will be accretive over the long haul, as FirstBank can attest.

Bill Streeter

Bill Streeter has been a full-time business journalist for 40 years, 34 of them with ABA Banking Journal. During his time with the magazine, he rose from Assistant Managing Editor to Editor-in-Chief. He has guided the magazine’s editorial direction since 1985 and has been an observer of momentous changes in banking, from the introduction of ATMs to the 2008 financial crisis and passage of the Dodd-Frank Act. In 2012 Streeter became Editor & Publisher, responsible for the Banking Group overall including the magazine, ababj.com, and related e-newsletters.

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