May 2, 201712:38 PMOpen Mic
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5 tips for finding the best bank match for you or your business
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In the small town of Mount Horeb where I live, there are five banks. A quick Google search of banks within a 20-mile radius turns up more than 100 bank locations. How on earth does a person — or a business — choose the right bank for them? Is there even a “right bank”?
In truth, most banks offer similar products and services. If you’re looking for a transactional relationship with your bank, you can shop around and find the “best deal” on your savings/checking accounts at one place, then get the “best deal” on your car loan at another place, and find the “best deal” on your mortgage at still another place.
You could do that.
I’m here to tell you that there’s a better way to do your banking. And while the little tenths of a percent you save here and there may feel good short term, there are significant advantages to finding a banking home that will add up to real savings in the long run. In other words, the “best deal” (purposely in quotation marks) may not be the best deal for real.
Finding the right match
Much like any relationship — a marriage, a friendship, or a business partnership — it’s important to find the right match based on your needs, expectations, and shared values. If finding the perfect mate were so easy, we’d all just count off and pair up with the person standing next to us. Instead, the right match brings out the best in you, helps you realize your full potential, and enables you to build the life you want to live.
Your bank can be that kind of relationship.
So how do you find your bank-match-made-in-heaven? These five tips can help you determine what to look for and where to find it:
1. Size matters.
Most people lump all banks together into one big category. In reality, there are large national/international banks and smaller community banks, each serving a somewhat different purpose.
According to bankrate.com, America’s 10 biggest banks hold $10.1 trillion in assets. The No. 10 bank needed $253 billion just to make the list. Why does that matter? If you are running a multibillion-dollar global company, you will require a large national bank to meet your needs for capital lending and cash flow, as well as the ability to manage international currency issues. This might also matter if you run a cash-based business that requires multiple locations spread throughout the country for on-site deposits.
Alternately, if you run a small or mid-sized company with a local or regional footprint that prioritizes building and re-investing in the communities where you live and work, then a smaller community bank might be a better fit for you. Most community banks can either manage all needs for capital lending you might require or will cooperate with other similarly sized local banks to provide the services you need.
Most businesses are better off being a big fish in a smaller pond. You’ll get more personal attention and a stronger commitment to understanding your overall needs. Perhaps a good rule of thumb would be to roughly match your personal or corporate finances to the size of the bank’s finances.
2. Man versus machine.
How important is it for you to know the banker you’re dealing with?
National banks will have a customer service representative who handles your loan application or account setup, but then usually hands your account over to a management company with an 800 number to call with questions. If your finances run on autopilot and don’t need much tinkering or re-evaluation, then this might be the most efficient process. This scenario may provide a lower rate.
Many businesses — and individuals, for that matter — may need to refinance loans, extend the terms, or renegotiate payments based on current conditions. A community bank may be more willing to work with your situation because they’re more familiar with your company and the community/clientele you serve. You will work with a local representative who is available to answer questions and explain options. If all your accounts and loans are serviced in one location, your local bank rep may even recognize potential issues before you do and point out opportunities to make the most of your assets and available capital in order to avoid problems down the road. It’s that proverbial personal touch.