10 Points to consider when choosing a bank
Banks are like clothes, no one size fits all and a different choice is required depending on the occasion.
Please see below 10 points to consider when choosing a bank
1. Location and network – a local presence is helpful if you have need to visit a branch for instance to deposit cash takings. Some banks have no branches at all. Furthermore, if your business is national or even international a bank with a wide reaching network would be an advantage.
2. Sector Specialism – Many banks, mainly at the corporate level, have specialist Relationship Mangers that will solely deal with businesses within your sector. As a result, you can benefit from their expertise. Other banks take a more general approach with Managers running a mixed portfolio although they will still have good knowledge of traditional sectors. If your business is very niche it is helpful to have the support of a Manager that understands its specific traits.
3. Product Specialism – You may need certain products such as Invoice Finance or Trade Finance to operate your business effectively so you need to ensure these are on offer and meet your needs.
4. Bank Policy – Some banks do not cater for certain business types as they are not within their strategy or risk profile.
5. Bank Risk – A question asked more and more. The answer depends on exposure in terms of lend/deposits and quantum.
6. Interest rates – these differ per facility, term and client risk profile and can either be fixed or variable against Base or Libor.
7. Commitment fees – these differ per facility and client risk profile and may be payable in the form of a non-utilisation fee whether drawn or not.
8. Relationship and Rapport with your Manager – particularly if you are borrowing and need frequent reviews and exchange of information. You will need an open relationship with good communication. Ideally once settled you would not want to see a frequent change in your Relationship Manager although people move on/get promoted just as in any other business.
9. Personal service, call centres or on-line – Some banks sell a very hands on personal service whilst others will use call centres and enable you to process many of your transactions on-line. It very much depends on the service that suits you best, costs and any criteria you may need to meet.
10 Speed – Particularly the speed of lending decisions. Credit Committees, Relationship Manger discretion, Electronic Credit Score…even how busy your Relationship Manager is will impact on the time taken for decisions and every deal can be very different. What is guaranteed is that if you go to your bank fully prepared with quality information that they do not have to come back and question you’ll certainly be better placed for a more rapid decision.
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