Many years ago as a young ambitious Bank Manager I had a letter published in the Bankers Magazine ranting about the inadequacies of the 'old' Captain Mainwaring style Bank Managers who whined on and on about the quality of Bank Managers - things are not like they used to be when the local Branch Manager knew all his customers by name.
I now find myself in a similar position - my experiences over the last week or two leave me in despair in respect of the way the Banks are now treating their customers.
There seems to be very little analysis of their clients business, little attempt to really understand repayment source and a total focus on the security available and the ability of the client to support any borrowing with personal guarantees.
In the old days PARSER was the pneumonic we used to follow:-
i)Person -know your customer,
ii) Amount - how much do they want to borrow?
iii) Repayment - how would it be repaid?
iv) Security - if the above are satisfactory what security is available in case a problem arises?
v) Expediency - any other reason why we should do it?
vi) Remuneration - what will we charge by way of margin and fees?
The new model seems to be WAM 'What's in it for us and how can we maximise return without taking any risk?'
I have recently spoken to a number of Banks on behalf of prospective clients and the focus has invariably seemed to be to minimise Loan to Value and tie in the client totally with personal guarantees - what chance does a start-up or relatively new and growing business have to get bank finance. YET the Banks still insist that the majority of applications for new facilities are being approved.
On the back of my recent experience a more pertinent question is - how many businesses no longer approach their banks for help and assistance as they know it will be a waste of time?
I spent 30 years on the other side of the desk and I saw numerous business plans that simply did not stack up BUT we did take some risk and we did get it right far more often than we got it wrong. However, that meant we had to understand our customer, their business and their market - it is disappointing how little time is now taken to understand these issues.
Sadly, the SME market is slowly being squeezed as a result of the controls introduced to recoup the the losses made as a result of the excesses of, and the failure of the Banks to control the 'Boys in the City' - the Masters of the Universe who made money despite themselves - the ones who did not understand their product, their clients or the market and had no care for the risks they were taking.
The Banks have the prerogative to choose whether to lend or not but please let's have no more platitudes - admit that there is no appetite to support the SME market in a way that will help it thrive!
Please tell me that I am simply and old and embittered banker who sees the past through rose tinted spectacles - I would really like it to be proved that I am wrong!
Thursday 20 May 2010
Friday 16 April 2010
IT and Communications - an Observation!
Is it me? In recent months I have listened to IT and Communications experts telling me how the world is changing - yet as far as I can see most of the population uses a mere fraction of the capability of IT and communications systems.
Experts by definition are generally passionate about their area of focus BUT very few seem to be able to communicate the benefits to the rest of us!
Has anyone devised, developed or considered a way of engaging busy people so that they too can be enthused enough to learn what technology can do and why they should use it.
So much of what we hear is patronising and if not patronising put over in a way that demands 'loads' of prior or even detailed knowledge.
PC's, wifi, laptops, Blackberry, iPod, websites, bluetooth, VOIP - all have their place but how can I learn to use them more effectively without spending hours ploughing through manuals and brochures etc.
A challenge to you 'technologists' - please find a way of helping those of us who want to use technology more effectively but don't know what questions to ask because we don't know what we don't know!
DISCUSS!!
Experts by definition are generally passionate about their area of focus BUT very few seem to be able to communicate the benefits to the rest of us!
Has anyone devised, developed or considered a way of engaging busy people so that they too can be enthused enough to learn what technology can do and why they should use it.
So much of what we hear is patronising and if not patronising put over in a way that demands 'loads' of prior or even detailed knowledge.
PC's, wifi, laptops, Blackberry, iPod, websites, bluetooth, VOIP - all have their place but how can I learn to use them more effectively without spending hours ploughing through manuals and brochures etc.
A challenge to you 'technologists' - please find a way of helping those of us who want to use technology more effectively but don't know what questions to ask because we don't know what we don't know!
DISCUSS!!
Thursday 25 March 2010
A website is a website really - how wrong can you be!?
The pace of technological change, as we all know, continues to get faster and faster and for some of us it seems almost impossible to keep up with things - internet, social media, tweeting and texting - are all modes of communication which we are increasingly taking for granted.
Where is it leading us? I have just had an extremely interesting discussion on the design of a website for my business. Am I naive? The first question stumped me despite years of business experience - what do you want to achieve with it? Easy I thought but how wrong could I be.
It became very clear to me that you really need to understand the purpose of the site before you can even get to first base. Secondly you need to have an idea what your budget is or should be. I had never even thought about it but I should have!
I made a big mistake - I thought a website is a website but it became clear to me when I spoke with an expert that is much more than that - it can be your shop window but it can be the 'maker or breaker' of your business - when I was confronted with the most basic of questions I realised that I really needed to get a better understanding of what I wanted to achieve with the site.
At the end of the day without that basic understanding I could have wasted a lot of money investing in something I don't need - technology for the sake of technology - how often do we do that - particular we boys and our toys!
Well I have now given it some thought - I need it to be simple and easy to navigate so that my current and future clients get the information they need about me and my business.
At the end of the day I simply want people to know what I do and how I can help them do what they do better! A very basic lesson learned.
In summary, how many of us need to look at our websites and ask the same questions - I now realise that we all need a strategy for web development as much as we need a strategy for our business - without a clear and defined strategy we can waste time and energy as well as that important commodity - MONEY. So before you invest talk to someone who knows what they are doing and will help you decide what will meet your needs cost effectively. It has helped me!
Here's hoping that my website does what it sets out to do when I get it up and running. Maybe you will check it out in due course and let me know!!
Where is it leading us? I have just had an extremely interesting discussion on the design of a website for my business. Am I naive? The first question stumped me despite years of business experience - what do you want to achieve with it? Easy I thought but how wrong could I be.
It became very clear to me that you really need to understand the purpose of the site before you can even get to first base. Secondly you need to have an idea what your budget is or should be. I had never even thought about it but I should have!
I made a big mistake - I thought a website is a website but it became clear to me when I spoke with an expert that is much more than that - it can be your shop window but it can be the 'maker or breaker' of your business - when I was confronted with the most basic of questions I realised that I really needed to get a better understanding of what I wanted to achieve with the site.
At the end of the day without that basic understanding I could have wasted a lot of money investing in something I don't need - technology for the sake of technology - how often do we do that - particular we boys and our toys!
Well I have now given it some thought - I need it to be simple and easy to navigate so that my current and future clients get the information they need about me and my business.
At the end of the day I simply want people to know what I do and how I can help them do what they do better! A very basic lesson learned.
In summary, how many of us need to look at our websites and ask the same questions - I now realise that we all need a strategy for web development as much as we need a strategy for our business - without a clear and defined strategy we can waste time and energy as well as that important commodity - MONEY. So before you invest talk to someone who knows what they are doing and will help you decide what will meet your needs cost effectively. It has helped me!
Here's hoping that my website does what it sets out to do when I get it up and running. Maybe you will check it out in due course and let me know!!
Wednesday 17 February 2010
Challenges Continue
The Isle of Man budget came and went yesterday with what appears to be mixed response.
There is no doubt the island faces some tough choices in the years ahead but it will take time for the population to get their 'heads' around what needs doing.
As a first step the budget seeks to start the process of change - marginal increase in taxation will impact the better off whilst ensuring the less well-off are not unduly impacted by additional tax. The increase from 18% to 20% will raise £9.4m
Revenue spending has been cut by £37.1m (without decreasing net spending on health and social care).
A 1% increase in Employee NIC will raise £7m
And £15m will be transferred from Reserves.
Could more have been done - my response is yes but at what cost - the Treasury Minister has sought to balance the books without threatening stability.
The challenge will be for the population including those in public service to recognise that we are in this together and that no one is exempt form the external pressures that the island is continuing to face.
The Isle of Man remains a stable economy and with the right resolve can survive the threats from outside.
There is no doubt the island faces some tough choices in the years ahead but it will take time for the population to get their 'heads' around what needs doing.
As a first step the budget seeks to start the process of change - marginal increase in taxation will impact the better off whilst ensuring the less well-off are not unduly impacted by additional tax. The increase from 18% to 20% will raise £9.4m
Revenue spending has been cut by £37.1m (without decreasing net spending on health and social care).
A 1% increase in Employee NIC will raise £7m
And £15m will be transferred from Reserves.
Could more have been done - my response is yes but at what cost - the Treasury Minister has sought to balance the books without threatening stability.
The challenge will be for the population including those in public service to recognise that we are in this together and that no one is exempt form the external pressures that the island is continuing to face.
The Isle of Man remains a stable economy and with the right resolve can survive the threats from outside.
Friday 18 December 2009
End of Year
I don't know where he year has gone and note that I have failed miserably to update my blog - despite being told that regular updates are essential.
Well the IOM has so far survived the worst of the recession although 2010 will be a challenging year on the back of changes to to the Revenue Sharing Agreement.
SME's on the island continue to have mixed fortunes with some continuing to do well and actually grow.
Whilst the contacts I have represent a small cross-section the availability of credit remains a major worry and threat.
Despite protestations from the Banking Industry the perception and reality is that there is now very little flexibility being shown by the Managers of small businesses. The Managers seem transfixed by process and uncertain about what they will get support for. Decision making is now taking even longer and is in danger of paralysing some SME's who otherwise have good businesses.
What is the answer better training and clearer lines of sight from business through to the real decision makers - cedit scoring has a role but is it really able to help decision makers when we are in unprecedented times.
How do you Credit Score an open and two-way relationship? - in simple terms you cannot. The community needs community bankers who know there customers, know the economy and know how their clients' businesses fit in to the economic cycle.
Well the IOM has so far survived the worst of the recession although 2010 will be a challenging year on the back of changes to to the Revenue Sharing Agreement.
SME's on the island continue to have mixed fortunes with some continuing to do well and actually grow.
Whilst the contacts I have represent a small cross-section the availability of credit remains a major worry and threat.
Despite protestations from the Banking Industry the perception and reality is that there is now very little flexibility being shown by the Managers of small businesses. The Managers seem transfixed by process and uncertain about what they will get support for. Decision making is now taking even longer and is in danger of paralysing some SME's who otherwise have good businesses.
What is the answer better training and clearer lines of sight from business through to the real decision makers - cedit scoring has a role but is it really able to help decision makers when we are in unprecedented times.
How do you Credit Score an open and two-way relationship? - in simple terms you cannot. The community needs community bankers who know there customers, know the economy and know how their clients' businesses fit in to the economic cycle.
Tuesday 10 February 2009
Bonuses for Long Term Performance
At long last there is a recognition that bonuses should only be paid when businesses perform over a long period of time.
For far too long banks have rewarded short term success and that culture has seeped down to the front-line. Selling your than developing relationships became the mantra. If you failed to hit a short term sales target you went unrewarded at best and at worst were out of a job.
Analysis of requests for lending became less and less robust and the answer "if we don't do it xyz Bank will!". Bonuses were paid to aggressive lenders who built the asset book - they were successful and moved on to bigger and better jobs. The mess was cleared up by the 'steady-Eddies' and this continues to be the case.
It should now be the time of the Bank Managers who build business steadily, conservatively and soundly - building relationships with clients on trust and not just price. Clients need the Banks to be there in the bad times and yet, far too often, they are not.
It is a EUREKA moment - banking is a profession that can only ever survive on trust but it will take along time for clients to trust their bank again.
For far too long banks have rewarded short term success and that culture has seeped down to the front-line. Selling your than developing relationships became the mantra. If you failed to hit a short term sales target you went unrewarded at best and at worst were out of a job.
Analysis of requests for lending became less and less robust and the answer "if we don't do it xyz Bank will!". Bonuses were paid to aggressive lenders who built the asset book - they were successful and moved on to bigger and better jobs. The mess was cleared up by the 'steady-Eddies' and this continues to be the case.
It should now be the time of the Bank Managers who build business steadily, conservatively and soundly - building relationships with clients on trust and not just price. Clients need the Banks to be there in the bad times and yet, far too often, they are not.
It is a EUREKA moment - banking is a profession that can only ever survive on trust but it will take along time for clients to trust their bank again.
Saturday 6 December 2008
Pressure on the Banks
It remains interesting yet frustrating to observe the current debate about the role of the Banks and the pressure that is being put upon them to lend.
It was refreshing to read an article earlier this week in which a 'journalist' admitted that sometimes the right answer is NO - as I have said in a previous blog.
In my view the Government continues to find ways to divert attention from its disastrous handling of the economy. There comes a time when a bank manager has to call time on his client - this is when cash flow dries up and there is little chance in the medium term that it can be expected to recover. At that point it is the right decision to help a client find a way out and limit damage to both the shareholders and the bank.
As an ex-banker I am not here to defend the banks in all cases - they do need to be much more professional in the way that their Managers interact with their customers. Managers who have never experienced a downturn - and that will bethe majority - have to be helped to identify those relationships which can be helped through the recession.
Generally, it will bethe customers who seek help and talk to their Managers who have the best chance of surviving. However, one fear I have is that decisions and judgements will be made by the banks on an 'industry basis'. I have seen banks withdraw form one sector after another because they have experienced a 'bad debt or debts' in that sector - i.e. they tar everone with the same brush!!
In this recession the Banks need to be much more creative and recognise that there will be winners and losers in every sector of the economy. The key will be to identify the management teams that have the skill and tenacity to pull through - with a little help from their friends. This wil take time - and I am afraid time is short for toomany Bank Managers who often have ten's if not hundreds of small businesses to manage.
To my point - if the Prime Minister wants to help he should be focussing his attention on encouraging the Banks to find ways to educate and train their inexperienced Managers to understand their customers and know when to be bold - they need to be bold enough to say no and bold enough to say yes when that is the right decision - fight the Credit men in back office when necessary. In both scenarios the Bank Manager should not simply abandon their client to their fate.
The Bank should be a friend in adversity as well as in the good times. Don't take the easy option and remove the umbrella as soon as it starts raining.
It was refreshing to read an article earlier this week in which a 'journalist' admitted that sometimes the right answer is NO - as I have said in a previous blog.
In my view the Government continues to find ways to divert attention from its disastrous handling of the economy. There comes a time when a bank manager has to call time on his client - this is when cash flow dries up and there is little chance in the medium term that it can be expected to recover. At that point it is the right decision to help a client find a way out and limit damage to both the shareholders and the bank.
As an ex-banker I am not here to defend the banks in all cases - they do need to be much more professional in the way that their Managers interact with their customers. Managers who have never experienced a downturn - and that will bethe majority - have to be helped to identify those relationships which can be helped through the recession.
Generally, it will bethe customers who seek help and talk to their Managers who have the best chance of surviving. However, one fear I have is that decisions and judgements will be made by the banks on an 'industry basis'. I have seen banks withdraw form one sector after another because they have experienced a 'bad debt or debts' in that sector - i.e. they tar everone with the same brush!!
In this recession the Banks need to be much more creative and recognise that there will be winners and losers in every sector of the economy. The key will be to identify the management teams that have the skill and tenacity to pull through - with a little help from their friends. This wil take time - and I am afraid time is short for toomany Bank Managers who often have ten's if not hundreds of small businesses to manage.
To my point - if the Prime Minister wants to help he should be focussing his attention on encouraging the Banks to find ways to educate and train their inexperienced Managers to understand their customers and know when to be bold - they need to be bold enough to say no and bold enough to say yes when that is the right decision - fight the Credit men in back office when necessary. In both scenarios the Bank Manager should not simply abandon their client to their fate.
The Bank should be a friend in adversity as well as in the good times. Don't take the easy option and remove the umbrella as soon as it starts raining.
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