This material originally appeared on my Rural Economic
Revitalization Blog at www.arkansawriverwriter.blogspot.com
The Des Moines Register recently reported that 50% or more of those expected to
inherit farm land will sell it. This reminded me that Generational
Retention remains a key to the continued viability of many community banks. I
will expound on each of the three key issues, but I felt it appropriate to
include this general post as a reminder:
General Transfer is a key issue for most rural banks. One
challenge these banks have is relationship retention. If you've taken the first
step (and some are frankly afraid to look) and found that many of the heirs to
your current deposits are "somewhere else" then you realize the
challenge. Two parallel tracks are necessary. First, address the heirs who are
still local. Reach out, through parents if necessary, to form relationships and
help these heirs learn that your bank can be a valuable tool for managing the
assets that will be left to them, be they a business, land, or simply deposits.
Second, put together a plan to reach out to absentee heirs with essentially the
same message . . . we are here to help you manage your inheritance. Your plan
for resident and non-resident heirs is comprised of three main parts:
relationship (a face); services; and technology.
Generational
Retention: Relationships
In keeping with the theme of what community banks can do to
preserve relationships as older depositors die off, my last post indicated
there were three keys. This time, lets look at the first key - the Relationship
Factor. If you want to keep banking relationships beyond the current
generation, you must - well before a "transfer inducing" event occurs
- establish solid relationships with heirs. This starts early in life . . .
even during elementary school. Kids savings programs, and financial education,
can serve to implant your brand into kids thinking. As kids grow older, work
with mom and dad to make sure the kids feel that the bank is a trusted friend
and adviser. We'll talk more about technology in a future post, but it is
essential in staying connected to these youngsters if they leave home. Hosting
events, or webinars, regarding estate planning, generational transfer, and
asset management will strengthen your position as that trusted adviser, and
make it easy for heirs to look to your bank for money management advice and
services. That's the goal . . . when parents retire or pass away, you want to
keep your relationships with the family money, the family business, the family
farm. Building strong relationships is the key.
Generational
Retention: Technology
Lets look at the second of the three keys to retaining banking
relationships across generations: technology. Banking has been quick to adapt
many new technologies, and a lot of them are customer facing. From the advent
of automated teller machines, through voice response systems, to today's mobile
banking platform, customers are demanding, and banks (most of them anyway) are
providing a variety of technologies to make access to information and
transactions simple and painless. A large part of maintaining and preserving
relationships with heirs and potential heirs is ensuring that it's easy for
them to do business with you. This includes Internet Banking for individuals,
and Internet cash management for businesses, along with remote deposit capture
for those customers who still handle checks as a primary payment method for
their business dealings. The rising popularity of Smart Phones makes mobile
banking - as an extension of your Internet Banking product - a must.
Packaging and promoting these services is important . . . as a
part of your overall bid to serve out of town (and of course local) customers.
Put together a brochure (print and electronic) and perhaps a web site to
promote your ability to assist families in preserving and enhancing wealth
across generations . . . include descriptions of all the ways that you can
help. Remember that promoting a comprehensive package casts you in a much
better light than waiting to react to requests for services. If you are serious
about surviving generational transfer, make that evident to all that do
business with you.
Generational
Retention: Services
The final of our three keys to success is services. Some of this
has already been covered under technology - but there is more to it than that.
Business specific expertise is an important part of helping families realize
that there may be more value to keeping the family farm or business than
selling it. Land management, timber management, business valuation, estate
planning, and general business planning advice are all important, depending on
the economic landscape in the communities you serve. These capabilities will
set your bank apart with current and future generations. For example: the death
of the farmer in the family need not mean selling off the land, if you can aid
the surviving spouse in leasing out the land for farming. Doing so can provide
comfort to the family, by keeping the land, and generate needed income for
years to come. There are many examples across many family oriented businesses.
As I stated previously, packaging and promotion is critical . .
. as a part of your overall bid to serve the heirs to your current customers.
Remember that promoting a comprehensive package casts you in a much better
light than waiting to react to requests for services. Again, if you are serious
about surviving generational transfer, make it evident to all that do business
with you.
About the Author
Trent Fleming serves as a trusted adviser to
financial institutions. For more than three decades, he has worked with banks
on matters as diverse as strategic planning, business continuity, employee
education, and operational efficiency. Fleming's presentations on technology,
management, and strategy consistently get the highest marks from his audiences.
He serves on the faculty of the Graduate School of Banking at the University of
Wisconsin, and regularly contributes articles to industry publications. He also
publishes the very popular banking newsletter “Trent's Comments.” Trent holds a
Bachelor of Science in Economics and Finance from Christian Brothers
University. More information at www.trentfleming.com or on twitter @techadvisor.Still learning!
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