Small Business Banking: The End of the Relationship Manager?
The role of relationship managers across Europe comes into question today with the release of the fourth annual Efma – Finalta report on Small Business Banking in Europe – Small Business Banking: The End of the Relationship Manager?. In the budget constrained environment of 2010, the report challenges the costly provision of the small business relationship manager (RM) and asks is there a need for this role?
The report outlines strong reasons why banks should critically review how they are using small business relationship managers and whether real value is being generated.
Approximately 50% of small business customers are relationship managed across Europe. Finalta looked at RM time-spend and believes too much time is spent disguising poor lending processes and other business inefficiencies from the customer. Further, RMs carry out low-value activities, instead of working on deepening relationships with existing customers, acquiring profitable switchers and exploring the personal aspects of the customer’s needs.
The report predicts over the next few years, successful banks will redefine their service models to develop a clear definition of the role and purpose of RMs and invest in fixing poor processes. Whilst the RM is not dead, there are likely to be significantly fewer in five years time.
Russell Shore, Director of Finalta commented:
“Thousands of relationship managers are employed across Europe at significant cost. Yet, too often, they are covering up poor processes or compensating for bad customer experiences.”
“While Finalta does not believe we are seeing the end of the role of the relationship manager, there is certainly a need for a more critical examination of the purpose and use of the RM than in the previous decade. For the relationship manager to survive long term, they must add value both to the customer and to the bank.”
Patrick Desmarès, Secretary General of Efma commented on the report:
“We have partnered with Finalta on the production of the Small Business report for four years now, and during that time we have charted some important changes in the way the European banks view the management of the SME segment.”
“At Efma we believe that part of our role is to help our members recognise where they can improve both their business model and their customer service, and in my view this report identifies some significant opportunities for improvement for this sector.”
90 banks took part in this research, representing 27 countries and 16 million small business customers. Respondents were SME segment heads or equivalent.