Sign On By Karekin Johnson, Relationship Manager, Wells Fargo Government Banking
The most insightful consultation that banks offer local governments is predicated on one simple idea. This is the idea that every municipality is different, that every municipality exhibits a pattern of behavior specific to their community’s needs and culture. Essentially, every community has a story to tell. Consultative banking partners understand that there is a story, and they seek to understand and help governments build and share their stories.
There is more to a banking partnership than deposits, service charges, and loans. With the municipal finance industry constantly changing and adapting to new technology, regulations, and demographic trends, it is more important than ever for banks to have an extensive understanding of governments and the corresponding communities that they serve. To meet the challenges facing the communities of tomorrow it is paramount that banks and local governments establish a consultative partnership. This type of relationship necessitates a commitment that banks be invested in not only learning about the breadth of a municipality’s operations, but invested in understanding the culture, history, and economic drivers and the vision of that community. A consultative approach to government banking allows local governments to fully maximize their banking relationships. We can organize the consultative partnership between local governments and banks into three categories: operational understanding, community engagement, and anticipating budgetary needs.
The key to successful partnership starts with knowing internal operations
For local governments to receive effective consultative advice from their bank, their banking partner must know them operationally. An effective and often underused resource available to governments from their primary bank is the business process review. The business process review is a complimentary service that entails your bank observing your government’s staff over a short period of time to examine how your government’s daily operations are conducted. The review results in a very thorough understanding of where your government is successful and identifying where there is an opportunity to improve operational efficiencies. Local government business process reviews can result in workflow improvement, reduced staff turnover, cost savings, and streamlined processes. These reviews can help leaders in government identify areas where their staff are dealing with high volumes of paper and labor-intensive activities which can be alleviated to maximize productivity. Furthermore, the business process review can equip governments with new technologies to streamline their reconciliation process and optimize their payables process while embedding tools that will assist in business continuity planning. Therefore, consultative advice from a banking partner is highly specialized and specific to how your staff operates. This insatiable appetite to provide the best consultation to your government does not stop with your government’s internal operations.
The most thoughtful partners invest time in community engagement
A bank’s consultative advice also comes from the desire to learn about your community. For local governments to receive the best insight from their bank, they must first assess how engaged their bank is within their local community. At the center of any consultative advice that a bank offers must be an understanding of that municipality’s community. For many local governments, strategic goals are updated annually which address the challenges and needs of their community. Leaders in government should expect their banker to not only know these goals, but act as an idea generator and go beyond reciting their community’s strategic goals. For governments to receive the best consultation from their banking partner they must employ their bank to go deeper than pulling the strategic goals from the city or county website. Government leaders must ask their bank to know the why behind their goals. Their bank should understand how the history of their community informs their future goals. An invested banking partner proactively attends virtual and in-person council meetings, volunteers locally, and invests in knowing the people and industries that drive that municipality’s local economy. As your bank learns about your community’s goals to promote affordable housing, leverage technology, and address the underbanked population, your banking partner can bring ideas and resources to help your community achieve its goals. Active engagement in your community results in a profound understanding of what drives your goals which translates into specific solutions and ideas tailored to help your government reach its goals.
Strong partners look to anticipate budgetary needs instead of reacting to them
Governments play a critical role in the provision of essential services throughout the nation. Often times this means municipalities must regularly make capital investments in growing infrastructure needs. When considering the mandate to maintain a balanced budget, this presents a continuous challenge for localities. It is in this quagmire, where banks may offer proactive solutions that address financing needs and budgetary shortfalls. It is incumbent on banks to not only listen to the capital needs of local governments, but also to anticipate those needs where appropriate. A strategic banking partner allocates time in studying capital improvement plans and analyzing debt profiles to map out future financing needs and current savings opportunities. Leaders in government must also expect their bank to know their community’s investment policy and relevant state statutes so that investment solutions meet regulatory requirements and government specific investment goals. Consultation in this area is based on banks knowing what your government has in state pools and constantly monitoring the rate environment to make recommendations when favorable investment opportunities arise.
Consultative partnership is a holistic approach to insights
The most insightful consultation comes from banking partners that understand that every municipality’s operation, community, capital plans, and investment needs are different. Although local governments are generally cyclical, individually each municipality has a different pattern, different borrowing needs, and a different story to tell. Local governments should not tell their story to their banking partners, they should expect their partners to come to the table already knowing it. Strategic insights from banks are derived from a thoughtful approach to understanding a local government’s operations, goals, and community.
Leaders in local government should regularly ask themselves the below questions to determine if their primary banking partner has a consultative approach to their recommendations:
- Does your banker understand your strategic goals and offer ideas to achieve them? Do they know what factors and considerations went into forming those goals?
- Is your banker attending community board meetings to understand what is happening locally? Can they identify the top employers and industries that drive your economy?
- How active are your bank employees in volunteering efforts throughout your community?
- Are the recommendations that your banker provides based on an understanding of your internal operations?
- Does your banker understand your community’s debt profile, capital plans, investment policy, and governing state statutes? Have they brought in specialists to pitch investment opportunities or identify interest savings? Do they regularly host informative webinars?
These questions are key to ensuring a consultative partnership between local governments and banks. Established banks like Wells Fargo have a specialized team of bankers that focus solely on local governments. These bankers are trained to take a consultative approach to banking governments.
For more information about governments and the strategic partnership with banks please contact your Wells Fargo representative or fill out the contact us form.
