Of course lending is not a ‘retail’ business–you can’t go to the store and buy a loan, can you? For decades though, small business lending has been lumped under the heading ‘retail banking’ due to it’s placement in the bank’s branch network, or retail side of the house. Unfortunately, my observation over the years is that many otherwise good lenders took this to mean that their business development strategy should resemble that of a storekeeper: wait behind the counter till someone places an order.
Obviously it doesn’t work that way.
In 1983, I was among a set of bankers that did what very few bankers had done up and until that point: attended sales training classes. It was a surprising experience to have been suggested by my employer, even though my banking professor had warned us that with deregulation (1980), bankers would be competing with Merrill Lynch, Sears & Roebuck (Dean Witter & Discover Card), and General Motors (GMAC) for business.
The best lending performers today must master two diabolically-opposite skill sets: competency at evaluating the intricate operating metrics that determine if a proposal is fundable within your bank’s credit policy, all the while convincing the borrowing prospect that if it is, they should accept your financing offer. Obviously it’s a challenge for the majority of the lending population, hence most banks separate the ‘hunters’ and ‘gatherers’ into two distinct groups, with limited expectations from both.
I believe that the most successful lenders will master both. The lending skills are always subjective, but you are served well with better skills to gather the right data, spot-check it onsite, ask vital questions and process the answers, and assess whether the deal can actually be done. Your ability to determine the likelihood that a non-sales inspired underwriter and credit lord will reach the same positive conclusion as you will lift your lending success dramatically, and the sales skills will follow. [Read more…]