“The person who figures out how to harness the collective genius of his or her organization is going to blow the competition away.”
–Walter Wriston

As Chief Executive Officer of Community Sample Bank, you are reviewing your 2006 strategic initiatives. Among them is a mandate to double the number of products that you offer your current customer base. Your recent efforts to cross-sell products into your largely consumer-based market have been gaining momentum, and it’s now typical to see customer relationships—that started via a new mortgage—include deposit and investment products offered by your institution. While these are favorable developments, you still face the daunting task of taking the current “share-of-wallet” level from four products to eight.

Thanks to a growing retirement population, local demand for health care, legal, and other professional services is increasing. You suspect that many of your customers are connected with these professional business services. What could be better than gaining additional share-of-wallet by capturing the business deposits of your existing professional customers—doctors, dentists, lawyers, chiropractors, and speech pathologists?

Your research into the size of this business segment—in the zip code that corresponds with the largest branch located within your primary market—reveals the following:

In this particular zip code, professional services represent 45.2% of commercial activity. With average annual turnover per business of $790,000 and an according level of retained profits, you might reasonably conclude that this segment of the commercial market is worth pursuing. As we look at specifically the health care and legal businesses located within the zip code, Table 2 validates your view that these medical groups and legal services are particularly associated with high revenues-per-business.

It’s Not Only About Deposit Balances and Lines of Credit
Before you try to extend into your reach into your customer’s business domain to obtain their commercial deposits, appreciate the fact that the customer is always looking to solve seven key financial requirements:

Building Customized Deposit Products: Going Beyond Marketing the Personal Account
The professional services market requires special handling. In a 2004 study, NBW Consulting, a specialist in branch sales performance improvement, concluded that 60% of small businesses chose a bank on the basis of a branch’s proximity to its place of business. Branch proximity is important to a small business—and professional practices in particular—because deposit flows are frequent and local, and readily accessible human contact is desirable in the event of a problem.

In addition to branch location, sales culture has a major effect on the generation of commercial deposits. In situations that are all too typical, consumer-oriented branch personnel do not take the steps to understand the specialized needs of a client’s business.

Consider these solutions that could differentiate your institution from the competition:

1. Implement a Professional Services Center (PSC) within branches that exhibit favorable characteristics (such as those shown above). Branch management could be compensated on the basis of achieving a minimum level of small business deposit production and profitability.
2. Offer a customized, professional services online banking product (the Business Professionals’ Account) that includes such attributes as: online bill-pay, daily balance notification, and access to a premium business MMDA. Consider a two-tier product structure, with the high tier consisting of more sophisticated cash management tools offered to professional service businesses that support larger volumes of transactions.
3. Install coin exchange machines within PSCs. Offer the service on a complimentary basis to customers exceeding a minimum level of commercial balances.
4. Target the legal services market with a Business IOLTA (Interest on Lawyers’ Trust Account) product. In many jurisdictions, IOLTAs support the legally required placement of client funds into interest-bearing accounts.
5. Offer a Business Deposit ATM Card and market the product as a vehicle for submitting deposits to the bank quickly. Business deposit cards could be issued to select employees, who may not necessarily be account signers, and would not extend to withdrawal or transfer privileges.
6. Develop customized deposit products for specific professional services segments. For example, in an effort to speed access to funds, you might consider a cash management system designed for health practices to collect payments from patient Medicaid accounts. To save your legal firm customers valuable time, offer those that require large volumes of certified checks the ability to print checks in-house on security paper via your online banking services.
7. Forge strategic partnerships or dedicate an in-house resource to provide financial education and advice to the professional services market. Participate in local and regional medical, dental, and legal professional forums on discussion points ranging from efficient merchant payment systems to retirement planning. Become perceived in your community as the financial solutions hub of the professional services market. Remember that credibility and trust are by-products of consultative selling.
8. Encourage branch personnel to sponsor and underwrite events held on behalf of professional associations. Increase your institution’s visibility in the eyes of the professional services community. This could be in the form of a sponsoring a hospital charity golf tournament or a trade association event. Active community participation aimed at select vertical markets goes hand-in-hand with increased brand awareness and customer loyalty.

The professional services market represents the ideal cross-selling opportunity. Why? You’re dealing with the financial requirements of the owner, the business, and the employees—all in one place. The deposits that you generate from your market’s professional service providers will serve as the ideal platform for expanded customer access and cross-selling opportunities. It’s time to take the plunge!

For more information, please contact John Biestman at the Seattle Bank.

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