It’s stunning to meet with the world’s most profitable and best-managed banks and see the same problem over and over again. The always troubled relationship between Credit and front-line RMs has deteriorated to new dysfunctional depths, with devastating impacts on RM productivity. Here’s the story that emerges after a little probing.
Most of today’s RM’s grew up in an easy credit environment and few were actually around in the last real recession in 1990. Those RM’s that were successful and stayed in the business learned what a good deal looks like, developing a sense for which loans were likely to get through the credit process and make their effort worthwhile. They were and are productive because they figured out how to invest their time in pursuing credit opportunities that had a high probability of approval.
And then the rules got turned upside down and–even in those banks that have become some of the best performers in the crisis–we hear the same stories about how RMs don’t know what a good deal looks like in this new environment, chasing deals that they think make sense based on their experience but the rejection rates keep getting higher and higher.
I’ve asked this question many times in recent meetings with Credit or Sales – and there usually is an uncomfortable silence and a shocked recognition that they actually don’t know. Read More »
