Bank consolidation is a familiar news headline these days, with the FDIC approving nearly 700 bank merger applications in just the last three years. Experts say it’s a trend that will continue as mid-sized and community banks expand their scale and efficiency to better compete with larger institutions.
If you’re a small business that just learned your bank is being consolidated, change is certain. It’s also a good time to reflect on your banking relationship and ensure that you’re getting the most value from it.
Comparing the options will help you decide whether to stay with your current bank or go elsewhere. Only you can decide, and the answer varies depending on your specific needs. Here are four questions to ask yourself – and your business partner if you have one – to decide which bank offers the type of relationship that is right for your current and future needs.
#1. Does my current banking team understand my business and banking requirements?
Do they have a deep knowledge of your operation, markets, sales cycle and growth goals? Do they make suggestions about how you can use their banking products and services to maximize your cash flow and put your money to work for you? Have they already talked with you about how the consolidation will impact you specifically? If the answer is no, it may be time to look for a bank that prioritizes these in-depth conversations.
#2. Is the consolidated bank consistent with my business’s culture, values and priorities?
When two banks come together, one institution may completely take over, or some sort of hybrid approach may result. Are you comfortable with the way the consolidated bank operates? Maybe you value local ties and community involvement. Perhaps you are focused on getting easier access to lines of credit and want access to tools that help you better track your money. You might prefer face-to-face banking at branches, or travel so much that you really prefer robust mobile banking app. Identifying what matters most to you, and how your consolidated bank measures up, will help guide your decision making.
#3. What enhanced offerings will be available, and what is their collective value to me?
Approach it the same way you would if an existing supplier merged or was purchased. In that case you would perform due diligence to understand the new firm’s offerings and value proposition, and weigh that against your business’s needs. If your current bank introduces a higher price structure for what you feel is less value, or you notice that general service levels are suffering, it may motivate you to go. But if they offer a suite of solutions that include fair interest rates, flexible business credit card options and acceptable terms and conditions, you may want to stay. It all depends on how the changes align with what’s going on with your business’s specific situation.
#4. How easy will it be to switch?
Sometimes this is the first question business owners consider, and they go no further because they assume the answer is “not very”. However, there are many banks out there that want your business and are ready, willing and able to help you make a seamless switch. If you decide to change banks, look for one that goes beyond a strong initial introductory and provides guidance, tools and resources for switching. For small businesses, that includes forms and checklists for basic tasks like cancelling and starting new automatic payments to more complex transitions like switching treasury services or merchant services that may still be under contract. Banks that are serious about helping you may also work directly with your current institution to move over accounts, transactions and services gradually – in a logical order – to minimize any potential disruption to your daily operations.
Time to Explore Your Options
How did you answer these questions? If you’ve decided to stay with your consolidated bank, have a conversation with them about their new banking and financial services options and how your small business can leverage them to your greatest advantage. If you’ve decided to switch, talk with representatives from a few banks that are more aligned with what you’ve defined as being important to you. Comparing several options will make it easier to make an informed decision, and give you greater peace of mind that your decision is the right one.