Barret School of Banking

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Universal Banker…it's easier than you think

I love the efficiency ratio in banking. Sadly, this is not the geekiest thing I have ever written, but it is nonetheless true. In my humble opinion, it is the most informative ratio in all of finance with the possible exception of RoE in a DuPont context. (Now, THAT may be the geekiest.) What it does is show where a bank spends its money in order to make its money and given the layout of bank’s income statement it does not take very much digging past the ratio to get to the heart of the issue. Most decisions that a bank has to make about its operations can be analyzed by this one ratio. It’s great.
Why the love fest? I bring this up to begin you, the reader, about efficiency in banking and, more particularly, efficiency with this “universal banker” concept that everyone is talking about these days. With efficiency ratios jumping up (not a good thing) due to compressed margins and fixed costs, the concept of the “universal banker” is an intriguing one. It’s one that has been around under different names and different guises, but it is nonetheless important to consider in today’s environment and, I would argue, as an ongoing adjustment to the culture of banking.
What is it? Looking up “universal banker” will give you a ton of definitions and they are all right. Here at Barret, we are going to be offering some programming on the Universal Banker concept and ways to incorporate it into your bank. Stay tuned.
But today, I wanted to think about efficient ways to begin incorporating this concept. How can we start to mold our employees into the universal banker that our customers seem to be demanding?
For one thing, if you haven’t noticed, some of our customers already assume their “banker” is a universal banker whether or not that person is a teller, loan assistant, CSR, loan officer, etc. In their minds, that person (not your logo…not your name…not the sleek new branch design) is the bank. In my 15+ years of financial services experience I have learned that customers do not understand (and sometimes do not care to understand) our job descriptions and organizational charts. Sarcasm aside…let that sink in. You know what your role is and you know what each of the roles are in the bank (probably) but does your customer? Should they even care? NO! You’re the bank to them. They have a financial services need and you are the banker. Congratulations…you are now a Universal Banker.
I could go on and on about this topic particularly about the necessity of properly motivating and training employees to be cross-trained. Also, I have heard all of the excuses from employees not wanting to do more work to management’s inability to enact an effective cross-training (or universal banker) platform. Motivating people is hard. Sometimes it is not about just money. Sometimes it is about money. Sometimes it is about being fearful to step out of that protective bubble. All of these are real and have valid points, but they can and must be managed.
Two quick ideas about this. Management’s retort that there is not enough money to hire someone to do the extra work has always bothered me. Let’s assume there is a teller who is making $15/hr who wants to learn more, grow, and there is a need for cross-trained employees. However, taking someone off the teller row is out of the question (that’s a different blog post for a different day…but as an aside…are you really that busy in the lobby all day every day? Doesn’t cross-training those employees make sense here?) Would this teller take a 50% raise, an elevation in title and, perhaps, some flexibility in his/her schedule to say nothing of the advancement opportunity within the bank? Would you be able to find an employee that is a high-quality individual, pay them $7.50/hr plus benefits, and be someone that is advancing in the bank? I doubt it. See why the efficiency ratio is in my mind here? A little increase in the top number allows for a larger increase in the bottom number, thereby decreasing the ratio which is what we call in banking, a good thing. I understand your bank’s situation is different and finding that right person is easier typed than done…but can you develop that person within your current employee roster? Is there a compromise of motivations that would motivate that employee as well as increase your efficiency? I’m willing to bet that there is if we look hard enough at who’s on the team and what the need is.
The final idea is moving the opposite direction. By that, I mean, instead of looking to elevate someone up, are there tasks that a loan officer or manager can/should be doing? Now wait…I haven’t lost my mind. I’m not talking about demoting profitable employees. Not. At. All. But my point is this, as lenders we are relationship managers. How many times, as a lender have you had a similar conversation to the following?
Customer: “Byron, thanks again for the getting that production line set up.”
Byron: “My pleasure! Glad to help! Let me know if there’s anything else that we can help you with at XYZ.”
Customer: “Actually, yes! Thanks for reminding me! My wife is going shopping for the kids’ school supplies and get some school clothes. Can you up my limit on the debit card?”
Byron: “Hang on, let me transfer you.”
Customers love being transferred to different people even if they know the person they are being transferred to. Kidding. If you want to be a good relationship manager, you want to manage the total relationship. You want to be the point of contact for the customer and he/she wants one point of contact they can rely on. Why, then, are some lenders not allowed to do basic account maintenance? Now, this opens a different discussion about onboarding and improving processes and software…and those are important and need to be addressed. However, granting someone authority within a computer system costs no money. None. Certainly, the above example is slightly exaggerated and not the way to properly handle that situation, but wouldn’t the whole process go much better if the last line read “Byron: *click click* “Done! Hope they have a great year!””
These may/may not work in your bank. I get that. My point here is to show that there some areas that any bank in any market in any rate environment can implement a universal banker concept with very little (if any) capital output. Look around! There’s got to be a better way!


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Byron Earnheart is the Programming Director for the Barret School of Banking in Memphis, TN and the host of the “Main Street Banking” podcast…the only podcast solely devoted to community banks. He has over 15 years experience in the financial services industry; 11 of which have been in banking in various roles from teller work to branch management. He spends his time playing guitar and singing in Delta Heart (the “house band of the Mississippi Delta”), writing music, cooking, reading, and enduring the University of Tennessee Volunteers athletic seasons. He is married to his wife Kelly of 11 years and has two children, John Aubrey (11) and Mary Laura (7). If you'd like to hear Byron's music, check him out on Spotify:
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