Even before the economic upheaval of the past decade, few service industries did less to provide actual services to clients than banking. Fees consistently rose, conveniences were regularly eliminated and customer service was unceasingly an afterthought. Consolidation in the banking industry has served to intensify these trends. However, it has also allowed relationship banking, a specialty niche in the industry, to more easily distinguish itself from other banking sectors. While faced with the same difficult regulatory and economic challenges as retail bankers, relationship bankers have found the changes in the banking industry have made it easier for them to explain why their model is superior to traditional retail banking. We sat down with Chuck Cowell, President and Chief Executive Officer of Dallas based Preston State Bank to discuss the particulars of relationship banking.

GLF: Explain for us what is meant by the term “relationship banking”?

CC: Relationship banking is more personalized banking as compared to what is offered by most institutional banks. 

A large number of individuals only look to their bank to receive deposits, issue debit cards and process paper checks and electronic payments. The financial profile of these individuals is comprised of the credit score and their W-2 to document their incomes. However, a large number of business owners, professionals , service providers and other individuals need more from their bank. These people need a banker they can with talk to face to face on a regular basis or who they can call to have a question answered. 

A banker used to be someone who knew how to run a business, had relationships with local business owners and who understood the economy of the local market. Relationship bankers still have these skills. A good relationship banker can offer advice on raising capital, managing receivables and on other aspects of running a business. More importantly, a relationship banker can make decisions on behalf of the bank to help clients manage and grow their business. They offer advice and counsel and because of how these banks are structured, they have a direct interest in the success of the businesses in the community.

GLFM: You mentioned “the way these banks are structured.” What do you mean by that?

CC: Most large banks are multi-billion dollar corporations whose shareholders are mainly institutions. Our bank has a shareholder base entirely comprised of individual investors, including many individuals who have owned businesses and who have strong ties to our community.  The ability of clients to deal with the same banker over a period of decades means our bankers better understand our clients. In many instances our board members know our clients. When necessary, our board can bring matters before the shareholders. In short, a good relationship banker is part of a team that is designed to be responsive to the needs of its clients. 

GLFM: Can you give me an example of relationship banking in action?

CC: Today I met with a gentleman wanting to purchase some residential lots for the purpose of building homes. Because I have done business with this client before and I know his business well, I knew his financial profile before we met. When he leaves, I am going to call a few of my other clients: a builder, a real estate broker who knows the area in which the lots are located and maybe one or two other people to help the client assess the investment itself. Later this afternoon, I am going to call the client and we are going to discuss both the project and the financing. Although it would be far less work, I can’t simply process an application and wait for the corporate office to calculate ratios and pass along a decision on the loan. An institutional banking officer is primarily concerned with getting his money back and concluding the transaction. A relationship banker’s goal should be helping the clients grow their businesses. 

GLFM: What about if I am one of those individuals who simply need a checking account and a debit card?

CC: Relationship bankers offer the same basic services as institutional retail banks.  Many clients realize their banking needs aren’t complex, but their needs are no less significant. People in general want to deal with decision makers who answer their own phone and who have the time and experience to help solve problems. A relationship banker will be able to help parents teach their children the keys to financial responsibility and how to build a financial profile that will follow them throughout their lives. For a lot of our clients, their main banking need is knowing they have a banker they can trust and rely on when situations arise.

GLF: Any suggestions for helping our readers find a compatible relationship banker?

CC: Word of mouth helps drive our growth. Start by asking friends and business owners for suggestions. Look for a banker with experience and who understands how businesses are run. You are going to want to deal with someone who has the authority to make decisions, not someone who only has the authority to collect information. The key to relationship banking is relationships. A good relationship banker has to enjoy helping others.  Being able to work closely with people to help solve problems is not only what makes my business gratifying, it is what makes my business successful. 

• An interview with Preston State Bank president Chuck Cowell as told to Dan Satterfield, GLF Staff Writer

For information or to meet with Mr. Cowell, contact him at: CCowell@PrestonStateBank.com