Even prior to the economic turmoil of the previous decade, the banking sector provided minimal actual services to its clients. Service fees continually increased, conveniences were regularly cut back, and customer service was perpetually an afterthought. The ongoing consolidation in the banking sector has exacerbated these issues. Nonetheless, it has also enabled relationship banking—a specialized niche within the industry—to better differentiate itself from other banking sectors. Despite facing the same regulatory and economic hurdles as retail bankers, relationship bankers have found it easier to communicate the advantages of their model compared to traditional retail banking.
We spoke with Chuck Cowell, President and CEO of Preston State Bank in Dallas, to delve into the specifics of relationship banking.
What is meant by “relationship banking”?
CC: Relationship banking refers to a more personalized approach compared to the services most institutional banks provide.
Many individuals use banks solely for deposits, debit cards, and payment processing. Their financial profile is often reduced to a credit score and their W-2 statements to verify income. However, a significant number of business owners, professionals, and service providers require more from their banks. These individuals seek a banker they can meet with face-to-face or call for immediate assistance.
A banker was traditionally someone who understood business operations, had connections with local entrepreneurs, and was knowledgeable about the local economy. Relationship bankers still possess these capabilities. A competent relationship banker offers guidance on capital acquisition, managing receivables, and other business operations. More importantly, they have the authority to make decisions that assist clients in managing and expanding their businesses. They provide counsel because these banks are designed to have a vested interest in the success of community businesses.
What do you mean by “the way these banks are structured?”
CC: Most large banks function as multi-billion dollar corporations with institutional shareholders. In contrast, our bank’s shareholders are individuals, many of whom are business owners deeply tied to our community. This continuity means clients interact with the same banker over a long period, fostering a deeper understanding of client needs. Often, our board members personally know our clients, enabling them to address concerns directly. Ultimately, a good relationship banker is part of a team focused on swiftly responding to client needs.
Can you provide an example of relationship banking in practice?
CC: Earlier today, I met with a client interested in purchasing residential lots to build homes. Since I had previously worked with this client and understood his business, I was familiar with his financial situation before our meeting. Afterward, I plan to call a few other clients, including a builder and a local real estate broker, to assist this client in evaluating the investment. Later, I will reach out to discuss both the project and financing. While it would be easier to process an application and let the corporate office handle the calculations, institutional bankers primarily focus on repayment. In contrast, a relationship banker’s objective is to support clients in growing their businesses.
What if I only require a checking account and a debit card?
CC: Relationship bankers provide the same fundamental services as retail banks. Many clients recognize that their banking needs might not be complex, yet they are still significant. People generally prefer to work with decision-makers who answer their phones and have the expertise to resolve issues. A relationship banker can help parents instill financial responsibility in their children while building a lasting financial profile. For many of our clients, the most essential need is the confidence of having a trustworthy banker available when challenges arise.
Do you have tips for readers on finding a compatible relationship banker?
CC: Word of mouth fuels our growth. Start by asking friends and business owners for recommendations. Seek a banker with experience who comprehends business operations. It’s essential to choose someone with the authority to make decisions instead of just someone who gathers information. The essence of relationship banking lies in building relationships. A successful relationship banker enjoys helping others and finds satisfaction in working closely with clients to solve their problems.
- An interview with Preston State Bank president Chuck Cowell as told to Dan Satterfield, GLF Staff Writer
For more information or to meet Mr. Cowell, contact him at: CCowell@PrestonStateBank.com
