It comes as no surprise that banks are battling with a trust issue. However, the problem turns out to be bigger and more complex that many think. Banks need to actively develop and manage the trust factor both within their banks and with their customers. Knowing that someone trusts you may result in a feel good moment, but in banking it pays off on the bottom line.

Let’s look at the trust issue that seldom gets discussed and that has become an unrecognized crisis within many banks. Despite the critical need for cross sell and wallet share, many bankers continue to lack trust in one another, impacting their willingness to sell the bank’s entire capabilities to their customers.

Particularly related to commercial and private banking, some bankers view customers more as “theirs” than the bank’s. They believe that introducing other areas of the bank to these customers puts them at risk in several ways: they can lose control of the customer and a poor experience with a colleague can erode the relationship they have worked so hard to develop. For example, one banker told me of introducing a product specialist from another area of his company. He commented he would never do so again as that person, in his view, tried to steal his customer for his own group. Many bankers can also recount tales of colleagues from other areas of the bank failing to meet the needs of “their” customers and, thereby, eroding the good will they had worked so hard to create. Whether real or imagined these concerns stall the wallet share effort at many banks; oftentimes, banks fail to openly discuss or deal with these issues.

Cross-sell and wallet share growth will never occur unless product specialists treat the relationship manager as their major client, explaining the value of their product to him. Product areas also need to, not incidentally, ensure that the RM has compensation for diagnosing customer needs and providing an introduction. RMs must operate with great self-confidence believing that the relationship ownership remains with them while approaching product groups openly rather than with suspicion.

One of the most significant trust areas involves Credit and the line banker. The near-death experience that many banks recently experienced has heightened the importance of an independent and proactive credit group. Greek mythology features Cerberus, a three-headed dog (with its heads focused on the past, present and future) that guards the gates of hell. Some credit officers seem to view themselves as Cerberus guarding the bank’s gates from the actions of often irresponsible credit officers. Let me contrast that type of situation where a lack of trust reigns with others in which the line banker and the credit officer respect each other and believe that they both want to serve the end customer while doing what is best for the bank. Banks operating in that world (and there are many of them) compete with a significant competitive advantage versus those banks in which credit and the line find themselves at loggerheads. If we were to recommend one area in which to focus an internal trust effort, it would be here.

But, trust does not just happen; beyond childhood, it needs to be earned. The banks in which credit and lenders are aligned feature lenders who possess great pride concerning their credit skills and their role in structuring transactions that meet the bank’s requirements. No attitude exists of “throwing it on the wall to see what sticks.” Similarly, the credit officers communicate regularly and collegially with the bankers; there is no “gotcha” mentality at these banks but rather regular communication between partners.

Now, think of the dollar impact, both related to personnel cost and the bottom line impact of having the line and credit aligned rather than in conflict. In a worst case situation, bankers waste time and dollars chasing deals that they should not chase; credit officers often continue to ask for information way beyond the point of incremental decision-making value.

Management needs to get directly involved to change this situation. First, it needs to ensure that bankers are completing required initial and ongoing credit analysis. Too often, the Credit area has to step in and become more aggressive because the bankers are not doing their jobs, a key factor in the erosion of internal trust. Second, management needs to review Credit requirements to make sure that the Credit area has not instituted an approach that requires a belt and suspenders and duct tape to support each credit application.

Management often raises the issue of the customer’s reduced trust in the banking industry as a significant concern. Some “civilians” lump the entire industry together as thieves that have been bailed out by the taxpayer, often unfairly categorizing the local bank with the sins of Lehman Brothers. However, while trying to address this industry issue, banks need to give immediate thought to their internal trust roadblocks.

Changing the internal trust dynamics takes time but results in demonstrated economic value related to more efficient operations and improved sales.
For banks internal trust = $.