A leader’s perspective from the front line of relationship banking

22 leaders across 12 banks spent their lunch break reflecting and sharing their views on Relationship Banking in COVID-19 times. The highlight was hearing from Simon Bumfrey, Head of Relationship Banking (Europe) at Silicon Valley Bank. He sat down for an interview to share his experience over several decades as a Relationship Banker and leader serving Tech and Media clients.

 

Learning from the Past

If there was one lesson from the dot com era at the turn of the century, there was no doubt in Simon’s mind what it was: “If you don’t understand something, don’t do it”.

The internet and the technology revolution it unleashed was in its infancy at the time and too many Tech leadership teams and investors jumped in without really understanding what they were doing.

However, painful lessons from this period were not forgotten and when the Global Financial Crisis struck in 2008, many leadership teams had shored up cash, strengthened their businesses and their balance sheets and ultimately, the Tech industry weathered the storm better than previous economic downturns, helping to spur the extraordinary growth and innovation of the last decade.

The resilience developed in previous crisis is now paying dividends in the midst of the recent COVID-19 global challenge for banks as well.

Simon noted that SVB employees have adapted quickly and effectively, proving their relevance to clients, demonstrating empathy to each client’s needs and situation and proving they can run a Commercial Bank from their homes.

While he would not want to operate this way indefinitely, Simon shared how working from home has proven far more effective than anyone expected, a sentiment echoed by all during the event and a dynamic everyone expects is here to stay in some shape or form.

That said, remote working can also put a strain on family relationships and colleagues’ mental health, emphasising the need for balance.

Simon also highlighted that while we have collectively increased our capacity and productivity in many ways, there is still no substitute for face to face relationships but being nimble and flexible is a key during these times.

 

Relationship Management Matters

Even in the age of accelerated digital communication, clients want traditional Relationship Management, perhaps even more than before, particularly at key inflection points.

A thoughtful approach to applying technology makes this feasible. Simon shared some simple and pragmatic insight around approach to Relationship Banking.

First, treat relationships as partnerships. That frame of reference can result in thinking broadly.

For example, SVB is actively looking for opportunities to introduce clients where they may be able to help each other, this highlights their partnership led approach built up over 35 years of relationship banking in the innovation sector to always add value to the client through their extensive network and Simon believes this is a key differentiator for SVB.

They are also working with clients to enhance SVB’s own services, capabilities and productivity through technology partnerships.

Secondly, get to know the whole organisation and beyond. “Relationships at FD, CFO and CEO level are important but so is getting to know the Board, Investors and the ecosystem within which clients operate. These relationships develop over time but are forged and strengthened in times of crisis like today. We may not need to travel as much as before and not every meeting needs to be face to face but the meetings that are will matter that much more so invest in making them count.”

Finally, one thing remains constant: the need to communicate and over-communicate is a key part in any relationship but especially during challenging times.

 

What do you want to be known for?

To bring this to life, Simon shared his view of some of the strengths he sees in how Tech firms and Banks each approach Relationships.

“To start, successful Technology companies have a ruthless focus on what they do well. They do not try to be all things to all people but rather have a narrow, disciplined focus on the problems they solve for their clients. They are quick to innovate, try new ideas, seek feedback, test new technologies and more efficient approaches but this is done with a relentless focus on getting better at solving the problems they have made it their mission to solve.

On the other hand, while Bank brands have taken a beating in the court of public opinion since the financial crisis, when an organisation is facing challenges or opportunities, they still go to their banker for support, advice and guidance. Institutional brands may suffer but the individual banker’s brand, as a trusted advisor, remains as critical in today’s difficult times as ever.”

Echoing previous comments around business focus as a critical ingredient for building relationships, Simon highlighted that the successful Relationship Banker will have a very clear answer to the question, “What do you want to be known for”?

 

70% of senior leaders surveyed expect it will take 1-2 years to get to a “new normal”

This is a valuable and timely reminder as today, clients and Banks alike are pulled in many different directions, wrestling with competing short and medium-term priorities.

Responding to anonymous polls during the conversation, just over half (55%) of the respondents from across the 12 participating banks believed that their biggest challenge is responding to clients effectively in the midst of the uncertainty, while the remaining 45% felt their biggest challenge was more future-focused – either transitioning to a “new normal” or driving deeper and faster changes required to protect their bank P&Ls and Balance Sheets.

Similarly, just over half (60%) of respondents felt the biggest challenge their Clients faced was dealing with immediate month on month survival or sorting through their options and priorities.

The remaining 40% felt that conserving cash and waiting things out until a “new normal” emerged as the most pressing challenge for clients.

Thinking beyond the near to medium term, 70% of the group was confident it would take at least 1 to 2 years before the economy settled into a “new normal” while the remaining 30% believed we may see a new normal within 6 to 12 months.

 

From Digital Nudge to Digital Shove; Optimism for the Future

Those expectations may seem sobering at first glance but the overall feedback from the group was optimistic.

Banks have spent years recovering and rebuilding from the financial crisis and as part of that; nudging away at digital transformation. The current crisis has provided a big shove into the digital future.

Echoing Simon’s observation, the group was unanimous around the positive experience from previous weeks as their organisations wrestled with various challenges but ultimately are now productively working as a remote workforce and meeting customer needs.

They have seen firsthand that their organisations can execute on bold, unprecedented initiatives in a short period of time with limited disruption to critical activities.

The experience so far has fed optimism for the future and how thoughtfully applied technology can improve productivity and relationships at the same time.

Relationship Banking can be done digitally though there are still moments that where nothing can substitute a face to face conversation.

The group of senior banking leaders concluded the event reflecting on what the digital shove into the future might entail.

In the spirit of “if you don’t understand what you are doing, then don’t do it”, some questioned the value of further investment into HS2 when current expectations are that travel will significantly decrease in coming years.

Notably, there was little to no mention throughout the event of technology providing banks with radical new capabilities and concluding comments reflected on the importance of focusing digital investments on improving and “smoothing out” as many processes as possible to reduce operating costs while creating more time and capacity for true Relationship Banking.

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