ABA Banking Journal - July 2008 - (Page 36)

CORRESPONDENT BANKING his perspective, hiring crack talent is also a must. The banking executive remembers a time back in the day when big correspondent banks from back East used to show up “during ski season,” or a few times a year “for lunch or a game of golf.” That sort of infrequent, almost ritualized, bridging of organizations in order to seal the deal also won’t suffice in a world that moves rapidly and requires the rugged connections of experts with a problem-solving bent. “My people are called in to offer advice and perspective,” Heugly says, citing work that spans areas such as asset and liability management and succession planning. “More often, they are called in when the downstream bank is unfamiliar with a business area and they want the correspondent to share experience,” he adds. “So there has to be expertise and trust there.” Nicole Holzapfel, senior vice-presi- and greater opportunities with existing clients to sell more products and services,” says Holzapfel. Common truths Representative of small, mid-sized, and large banks in this interlocking chain of outsourcing, the executives spoke about the correspondent model’s transitioning mores and operating philosophies. Although the banks interviewed differ in size and scope of operations, they agree on these points: 1. Correspondent work is keenly competitive and only getting more so in that most banks that operate in this area of outsourcing are seeking to broaden the menu of services offered and don’t need to stay near a home base. Banker’s Banks also constitute a competitive presence as do nonbank outsourcers, depending on the niche. 2. Bankers are great clients because the level of conversation can be advanced, take the relationship for granted.” Schaus, who operates out of his firm’s Phoenix office, says that in this active cycle of correspondent banking, banks like U.S. Bank, which had been quiet for a while, have become aggressive. He’s seen other banks get back in, clearly eager to make gains while the payment market has traction. “When the competition heats up, the community banks can benefit if they know what their options are and ask a lot of questions.” Some boundaries still exist JPMorgan operates its sprawling correspondent model squarely in a wide range of credit, treasury, and liquidity products, services, and systems. Yet, each area has specialists that, in Holzapfel’s words, “are quarterbacks guiding the relationship.” These quarterbacks, as she describes them, are important to making inroads with the client, though the words have to “You aren’t just going to waltz into a C-level meeting and take business without building a track record” —Nicole Holzapfel, JP Morgan Chase dent, correspondent banking, JPMorgan Chase, New York, agrees the more technical nature of bank operations means a more formalized sales process. In the case of JPMorgan Chase, selling correspondent services is about knowing the client. “Being able to demonstrate that you understand a client’s operation in detail counts,” says Holzapfel. While she agrees that deals, and clients, in correspondent work each have their own development curve, she does see a few commonalities: “Generally, there has to be higher coverage on a given account. The relationship with a client can’t—nor shouldn’t—be casual. You’re being a real partner, helping them run key aspects of their operations.” Considered part of the commercial banking division, JPMorgan Chase is investing in its correspondent business, expanding the geographic area where it delivers services, and hiring bankers. “We see great growth opportunities outside the 17 states traditionally served 36 JULY 2008/ABA BANKING JOURNAL and typically reflects “the understanding of colleagues.” Still, bank clients can be more demanding, generally, than the average corporate customer. For instance, an item better clear within the timeline expected and errors need to be rare events, because a bank client will “let you know about anything that goes wrong.” 3. Finally, correspondent banking is a business where the ability to do consultative service is ever more important as the industry faces accelerated operational and competitive change. Clearly, payments is driving renewed interest in correspondent work, which blows hot and cold in cyclical fashion, indicates Paul Schaus, president and partner of Catalyst Consulting Group. The firm aims its national practice at the financial services industry and often consults clients on choosing outsourcers. “I always ask if their correspondent is treating them right and if they’ve heard from the sales person lately,” Schaus says. “Strong, effective correspondents won’t be backed with deeds. “You aren’t just going to waltz into a C-level meeting and take business without building on a track record of demonstrated success and getting to know people,” she says of the work she has built her career on. “It’s about being in a position of making observations about a client’s operations that can improve efficiency or add value.” In payments, she says, her bank clients generally want to get a tour of operations. “Clients want to look at our vault or processing facilities. They’ll typically ask a lot of operational questions.” In areas such as deposit gathering— which, she notes, is generating a lot of momentum in the current market— Holzapfel’s team will partner with experts within her bank. “Banks are trying to keep their portfolios protected,” she says. Raising capital is another key area. As an example, Holzapfel mentions that many community banks are looking Subscribe at www.ababj.com http://www.jpmorganchase.com http://www.jpmorganchase.com http://www.ccg-catalyst.com http://www.ababj.com

Table of Contents Feed for the Digital Edition of ABA Banking Journal - July 2008

ABA Banking Journal - July 2008 Contents Editor’s Column Searching for New Paradigms at BIS Snapshot: C&I Asset Quality 100th Anniversary: Then & Now BofA "Event Concept" Wins Awards, and Customers ABA Resources ABA Chairman’s Position M&A: Beat Today's Market Blues Pass the Aspirin Cover Story: Workout Time Correspondent Banking: No Longer Just a Handshake Business Getting IT Right By Thinking It Through Webnotes Are You "Red Flag" Ready? Mailbox Banker’s Mart To Advertise/Index of Advertisers The Economy

ABA Banking Journal - July 2008

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.