Selling Effectively in Transaction Banking
What really matters in selling cash management & trade services
I recently attended an alumni lecture of my university. I spent a great evening with inspiring thoughts and interesting talks with wonderful people I have never met before. Also, I noticed that I was the one who graduated the longest time ago. Being one of the older people in the room, while speaking with other participants about what I do, I realised that I already have spent 27 years in transaction banking, mostly in sales and leadership roles, and also “at the other side of the table”, being a corporate client of transaction bankers. Those are bankers who sell transactional services such as cash management, trade finance or working capital solutions to corporate and institutional clients.
Transaction banking, being the “counterweight” for investment banking in large global financial institutions, constitutes a business and an industry in itself. For those working in it, following thoughts might seem obvious. Nevertheless, it is worth having a look why this business is so different from investment or retail banking. And what makes it unique and fun to work in.
The Long Run
In transaction banking sales you’re in it for the long run. Though there might be exceptions, where a transaction banking deal is part of a larger scale transaction (such as a buy-out, a spin-off or a refinancing), a sale in this business is hardly ever a quick win. It is often hard and long work, rather a marathon than a sprint race. A transaction banking deal is valuable for a financial institution, since a mandate contributes repetitively to the revenue line for a longer time with annual returns being rather stable, depending on interest rates and market conditions. However, the most appealing deals might have been won by first discussions starting many years before the positive deal outcome. And going with that: hard work during many years in between. What makes transaction banking unique, is that this work in between isn’t typically sales work only.
The Service Payback
Did you ever buy a product, say a car, since you were so happy with the service of your dealer keeping your running vehicle in shape? Many transaction banking clients make their buying decisions like that. For sure, a large deal is decided along criteria such as economics (price, value-add, cost efficiency) and product fit (functionality, geographical reach, technology). However, the service experience or references of the service provider are one of the centric pieces in the decision making process. The biggest advantage of transactional business to a bank is at the same time its biggest threat: The business returns every day again and contributes to the revenue line, however the business can also run into operational issues every single day again. A large customer which I managed a longer time ago once put it like this: “Finding good cash management banks is easy. We just need to remind ourselves how a bank treated us when we encountered the most critical day-to-day issues”. You can never consider service to be the single decision making criteria in an isolated manner, yet you can also never exclude it. In transaction banking decision making, the golden triangle is economics, product and service.
The 360 Degrees Team
In transaction banking you will find sales managers with highly developed competencies in strategic sales. I have worked with some of the best deal makers in this industry. Yet, a sale hardly ever is based on sales effort only. It takes a full team around and within the customer’s organisation. Only in that way, it is possible to understand the end-to-end processes which need improvement, hence have potential for the next sales lead. Process excellence expertise, system and IT knowhow or personal connectivity to sales, procurement or accounting staff: the reasons for winning a mandate are never the same. What is always true though: selling a transaction banking solution requires a deep understanding of the challenges and opportunities of the relevant sector and it needs a deep and holistic understanding of the perspectives and KPI’s of the buyer’s decision makers. And these can be very widely spread. From finance, group treasury, sales, procurement, the local businesses, HR to shared services and IT. The most effective sales people in transaction banking are deeply and widely connected with many functions within their clients’ organisations, taking a 360 degrees view at all times. They will always be looking for the angle to sell a solution based on the value it brings to the respective decision makers.
“What is it what you actually do for a living?”, is an often asked question I get at parties and family gatherings. Next time, I will just send them the link to this article. And while they see the twinkle in my eyes, I will say: “I am in transaction banking, still having fun!”.
