Businessmen: Follow these 5 rules before choosing your bank
If you’re a businessman or entrepreneur with thousands or millions of dollars hanging on the balance, you would want peace of mind when dealing with a lending institution, especially when financing loans are involved.
It is important to ensure that your bank is your partner and your partner should be a party you can trust.
You may at some point face the need to negotiate with the bank rescheduling your debts, for instance, without facing any difficulties or serious limitations.
Some UAE banks have had to make huge provisions in the past two years against bad debt, much of it relating to SMEs, which account for around 60 per cent of UAE’s GDP.
To guard against further defaults, some banks raised lending fees or withdrew from lending to such companies altogether.
But you can bet, all banks would love to have your business, if it is based on solid grounds, but not all customers should jump at the first that lays the red carpet for them.
So what are the 6 things that a business man needs to look for when choosing a bank?
Choose all not just one
1- WSJ reveals the importance of choosing smaller, regionally focused banks because they are likely to know local market conditions. They often provide more one-on-one access to loan officers and put more emphasis on a borrower’s character rather than just applying a checklist scoring model. And they can be more flexible during tough times, such as covering overdrawn accounts without imposing stiff penalties. Research shows that small banks are more likely than large institutions to issue loans to businesses in their community.
2- Earnest and Young says that customers want banking partners to stay close, understand their needs and consistently deliver quality services. These less tangible aspects of bank relationship management are key considerations when corporate clients select and retain their core banking partners.
3- According to ABC news, do not opt for banks that advertise “free checking,” before you are certain to read the fine print and ensure you do not need to maintain a certain amount to avoid fees.
Bayzat.com, a technology company, reveals that most banks in the UAE charge fees for many services and transactions that you may not be used to paying for. The UAE Central Bank, however, has set limits on the maximum fees banks can charge their customers.
4- Accenture Consulting, found following its global study of almost 33,000 banking customers that customers should expect digital innovation from their banks, but also these banks need to go further in terms of transforming their value proposition to meet distinct, emerging customer needs, that are more technologically inclined.
5-According to Stuff, a breaking news website, the ideal scenario is to select a bank with a strong working knowledge of your industry, and which identifies your type of business as part of its growth strategy. Such banks are more likely to have team members specializing in your industry and able to provide you with relevant and timely advice to place you in a strong business position.