Jeff Judy

Jeff's Thoughts - February 16 , 2011

Threat? Opportunity? Irrelevant?

If you pay the least attention to business and economic news these days, there's one word that you cannot avoid:

"China"!

Countless commentators have shared their prognostications about China's future. Some are convinced we are doomed to play second fiddle to the Chinese economy. Others see China as the next great opportunity, a huge market for American products and services.

The real danger? Seeing the whole issue of exports and the international economy as irrelevant to your bank. If you work with many local, smaller businesses, you may yawn and skip over these discussions in your newspaper because you don't think they have much impact on you and your customers.

When it comes to offering international banking services for your customers, even your smaller ones, there are two things you need to know:

  1. You can do it, and
  2. You should do it.

I don't have the space here to explain the how, but there are plenty of resources available to acquire the needed skills. And if you don't want to develop expertise in letters of credit and similar instruments in-house, you can work with other banks to bring these services to your customers.

Why should you offer international banking? Naturally, there are some opportunities for fee income there. But even if you merely break even on the international services you offer, the strengthening of your customer relationpships can be well worth your while.

Do you really have to tell your small-business customers, "We don't know how to work internationally, you will have to find someone else"? Why invite another bank to do this kind of business with your customer? The relatively small effort it takes to provide international services can amply repay you simply by retaining customers, removing the need for them to start working with another bank.

"But we serve small local businesses that are not going to export products internationally," you say? Look again! There are opportunities for small businesses in just about any size community, and you should be helping your customers find those opportunities.

After all, you might not think my own state of Minnesota is well positioned for export business. Far from either coast, we are thought of as "fly over land." We share a border with Canada, but it is a wilderness border, not an urban one.

Yet, having started my career in international banking, I can tell you from experience that some smart small businesses in this region have done well on the world market. I remember customers from smaller communities who made most of their revenue from international sales, and who came to the bigger banks to get services because their local community banks did not want to talk about it.

I could mention that, in part because of China's surging economy, export business from Minnesota increased nearly 20% last year, over the previous one. I could tell you about a company in Duluth that makes commercial and home kitchen cutting surfaces, a company that has found customers in 45 countries, even though it only has about 40 employees.

If you are not hearing about businesses in your market that are exporting now, or that could benefit from selling to international markets, it may be because those business owners assume that you do not provide international services.

Embrace international banking, and make sure your local market knows of your interest. The other side of the world is closer than you think, even for your small local business customers, and you should help them reach it.