Credit teams should turn into advisors

To support clients in periods of recession and beyond, credit teams should aspire to be valued business advisors to their clients past loans disbursements and payments. Asking whether banks have invested in credit teams gravitating more into a more advisory approach for business borrowers, may not yield many answers in the affirmative. Why is this hard? Growing up, I asked whether a leopard could change her/ his spots and my teacher answered, “I don’t think, so they are quite content as they are”.

 This is the same narrative with credit teams, “We were made bankers, we became credit guys, were told how important lending was, developed our skills and reputation and self-perception as lenders and quite contented as we are. It is not unusual for credit teams not knowing other bank products beyond loans, and very short in the knowledge of treasury management products.  Although banks invest in training, it doesn’t change the bankers which calls for organisational change if this is to be addressed.

What is the key challenge in transforming credit teams? Mixed messages from senior leaders, leader deal culture and incentive programs for credit teams weighed toward loans have been cited for this problem. If banks look at this as a training or knowledge problem then they will miss many of the things that go underneath both visible and invisible which sustain the current approach thus the need to look at it as a larger issue.

What businesses need?

Business clients are very clear about what they are looking for from bankers; they need the bank’s view on credit, what the bank likes and does not like, get their loans approved and renewed or expanded with reasonable rates and terms. 

On the other hand, banks increasingly seek non-interest income that is greater return on capital, income stream diversification and income stream stabilisation. If designed well, a plan to empower the credit team into business advisors will give equal benefit to both banks and customers.

 Every bank aspires to grow the relationship with customers. Everyone wants someone they can call in the bank if there is an emergency although some clients are price-driven and transaction oriented, caring less whether they have a relationship with the bank. What they want is a transaction done quickly and at a good price when they need one.

How to transform

So what can credit teams do to become business advisors? Credit teams should gain deeper understanding of the product offering of the bank and how their line clients can use them to their advantage. They should look at the needs of their clients (basic needs driven model) and then expand their capabilities to a relationship orientation growth of their portfolio as well building trust over a period of time before morphing into  advisors.

They should have  a broad perspective of their clients business, know  it well, gain a  broader points of view to know what works and what does not .They should have tangible expertise, and be good at listening and interpreting what their clients  want. Explaining and interpreting current conditions in the credit markets and how they affect the clients’ business on top of sharing information clients find useful in running business and connecting them to other people outside the bank who could be valuable to the business say a good tax advisor or a good marketing person should be helpful in cementing trust.

Backed by insights, experience and alliances, credit teams can contribute to improved non-interest income and offer their clients a personalised experience.      

The author is the director tax, risk and compliance advisory at Balon Advocates.