Lending, like most businesses, relies on steady success at the art of selling, convincing someone to buy what you’re selling. Long gone are the days when bankers were mere order takers, and today the lending industry is filled with a broad range of regulated and non-regulated lending options, competing to deliver capital to clients.
The challenge for our business though, is that sales are very qualified. Notwithstanding the different product solutions, risk appetites and company structures, at the root of every lending organization is a “credit culture,” or a defined set of boundaries of what they do and don’t do. So not only do lenders have to beat out other lenders for the deal, they have to do that within the constraints of their institutional credit guidelines.
An old boss of mine used to say, “we can always find gatherers–we need hunters.” What he (trained as an attorney) was implying was that it was not difficult to find the credit genius to sort out whether or not to do the deal, but the challenge was really to find the people who could ‘find the deal’ in the first place. In other words, focus on finding the deals, and we’ll sort them out later.
I think that line of reasoning was shortsighted, and based on the demise of his empire, I think my reaction was accurate. Why? Because hunters, while very important, can exponentially waste resources if they don’t know how to screen and qualify what they’re hunting for, based on credit factors and a positive ethical id.
Producing a pipeline of consistently bad deals bogs down the organization with transactions without earning potential, which waste the resources of the staff ready to act on the application. If the hunter is a really good salesperson, the risk expands when those selling skills are turned inward and wins over a faithful, but shallow group of gatherers. Banks died by the dozen in recent financial crisis as a result of these kind of situations where the real sales work was convincing the bank to book weak credit.
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The hunter/gatherer illustration implicitly degrades the ‘credit’ part of the credit business, and encourages the idea that the mighty hunter can save the day with superior sales skills alone. That reasoning ignores the need to filter out weak credit and find companies with qualifying attributes. It looks past the need for a business developer’s predisposition to be ethically faithful to their company, whose risk management is more important that the personal earnings potential of the hunter.
And finally, it ignores the age-old lesson that’s proven time after time that a sustainable, successful credit company must have a good credit culture.
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