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Distributors who thrive in today's financial market offer specialized service and innovative applications.FORM, Sept. 1999
It's easy to understand why the financial industry's high-tech, competitive and merger-laden environment leaves some distributors wishing for days gone by. "A lot of distributors want to be able to sell the way they did 20 years ago," says Dean Wenk, CFC, a sales and service representative at Business Printing Plus Inc. But the 30-year financial forms veteran warns against indulging in what he calls "horse and buggy" thinking.
Though he has seen other distributors fold in the wake of change, Wenk is determined to excel. Instead of wallowing in nostalgia, he prepares for the future by focusing on client needs. Wenk's Flushing, Mich., distributorship, now run by his son Donald, offers innovative products and services, such as e-forms and order placement via the Internet. "When we designed and implemented our e-forms, we also identified the problems and pitfalls associated with that application," Wenk says. Now the distributorship offers good advice to community banks interested in starting their own e-forms systems. "Because we're a small distributorship," Wenk says, "we can sit down with our small clients and say, 'We know what it's like. Here's what you can do.'"
In this age of Webheads and cyberspeak, some distributors fear that electronic transactions are eroding demand for printed products. With direct deposit, Internet banking and drive-up teller windows, fewer banks are requesting traditional financial forms. But the new technology doesn't have to spell disaster. Opportunities are available to those willing to ride the technological wave.
Embracing Technology
Billy Blackmon of National Bank Products partners with software companies that develop loan and deposit software solutions for banks. As executive vice president for the Warner Robbins, Ga., distributorship, Blackmon furnishes the majority of his financial customers with electronic forms. Because they are printed as-needed, e-forms save Blackmon's clients time, space and money.National Bank Products provides customers with 70 to 80 loan-related electronic forms on disk, including promissory notes, financial statements, credit applications, uniform commercial code forms, HUD forms, disclosure forms and "good faith" estimates. The distributorship also offers 50 e-forms related to deposits and investments, including account applications, certificates of deposit, safe deposit box applications, stop payment forms and direct deposit forms.
Many software companies sell directly to financial institutions, but Blackmon hasn't stopped fighting for his share of this lucrative business. "Ninety-nine percent of banks will switch to e-forms by the end of this year," he predicts. "Because of the Y2K implications, just about all the banks have had to upgrade their hardware and software in some fashion. We're in the banks every five or six weeks, and we make them well aware that we have electronic forms and talk about the software companies that we work with."
Another important technology in the financial market is image processing. Banks are fond of this innovation because it reduces manual handling of MICR forms, checks, deposit tickets, remittance forms, and credit and debit card receipts. Because documents go directly to a reader/sorter equipped with a high-resolution scanner, imaging eliminates the need for proof operators and increases the speed in which internal bank documents are processed. Imaging scanners require clear forms free of heavy colors and designs that can slow processing. Ideal forms have certain design elements that are not captured by the machine.
Three years ago, Blackmon began offering image-ready documents to a midsized bank in Georgia. He furnishes all the bank's internal documents, including general ledger tickets, electronic fund transfer forms and deposit tickets. This account also gives Blackmon an opportunity to offer value-added features and compatible products. For example, he prints easy-to-scan cash-in and cash-out tickets with a distinguishing band of color. Blackmon also sells transparent document carriers to hold torn or severely bent documents during processing. Only 20 to 30 percent of his customers have adopted image processing, but when imaging equipment becomes more affordable, Blackmon says the majority of financial institutions will make the switch.
In the meantime, Blackmon has noticed the popularity of a less expensive process-imaged statement preparation. The process digitizes check images, then reduces and laser prints them on an 81Ž2 x 11-inch statement. Each side of the statement contains up to 24 imaged checks. Prior to imaging, statement processing was time-consuming and labor intensive. Bank employees had to recover and sort cancelled checks, then combine them with statements.
Like image processing, imaged checks require several compatible products. "We've done thousands of 3-ring binders to hold imaged statements," Blackmon says. "We also provide the 8 1/2 x 11-inch cut sheets and the new 6 x 9-inch envelopes that they go in."
Fostering Customer Education
Ray Hough, president of Ray Hough Company in Muse, Pa., says compliance expertise is the secret to his success. His distributorship has flourished for 25 years because it offers financial customers expert advice. "You can't compete if you don't learn about the financial market," Hough says. "There are specialists out there, and if you can't meet their level of services, you can't play in the game."Hough admits that becoming a specialist in bank regulations-his area of expertise-is challenging. "Distributors have to learn and understand bank operating procedures and the requirements that the government places on banks," he says. "Other than stationery, it's hard to do a product that isn't impacted by government or state regulations in some way. Anybody can walk [into a bank] and say, 'Let me print this brochure for you.' But the guy who says, 'By the way, did you know that regulations are changing and you're going to have to comply with new forms?'-he's the one customers will remember."
Hough and his brother Greg, the distributorship's vice president of sales and marketing, often write and copyright text for compliance documents that don't already have suggested wording, such as the Private Mortgage Insurance Disclosure Notice. But the Hough brothers aren't the only ones adept at interpreting regulatory jargon. "We go through extensive training with our sales force on regulatory issues so they can sell and talk the right language," Hough says. "We'll draft our own models, and then our sales guys have to be able to interpret them for each individual client."
While large banks have attorneys who monitor compliance issues, Hough's small to medium-sized financial clients find it difficult to stay abreast of regulatory changes. That's why his company pours over press releases, state regulatory publications and commentaries from trade groups such as America's Community Bankers and the American Bankers Association.
In addition to notifying its clients of regulatory changes during monthly visits, Ray Hough Company publishes "Compliance Alert." The informational direct mail piece outlines new regulations and advertises Hough's compliance forms.
Hough's clients often seek his advice before making decisions regarding internal policy and procedures. He recently consulted with a bank president planning to reduce the time for holds to be placed on deposits into new accounts. "He wanted my opinion on how far he should go without jeopardizing certain safety or soundness issues," Hough says. "He also wanted to know if there were any regulatory requirements that required him to set a minimum or maximum time frame [on the holds]."
Hough also remembers an unforgettable call from a savings and loan's vice president. "He said, 'Ray, I've got a guy standing in my lobby, and he's telling me that by regulation I can't do certain things. I wanted to check with you about what I am allowed to do,'" Hough recalls. "I said, 'The first thing I want to know is how long this guy has been an account holder, and secondly, how much money has he put in the account?' The VP says, 'It's a new account with very little money, and there's been substantial activity on the account.' I said, 'If this guy knows the rules better than you, he's setting you up to take you. Freeze his account until all the checks clear and then close it out.'"
"There are a tremendous number of distributors out there trying to gain this business, and financial clients realize they can't afford to talk to everyone who comes through the door. They need to have somebody who can help them with compliance issues."
Ray Hough, President
Ray Hough Company
Muse, Pa.As a compliance and customer education expert, Hough enjoys a comfortable niche in the financial market. "There are a tremendous number of distributors out there trying to gain this business, and financial clients realize they can't afford to talk to everyone who comes through the door," he says. "They need to have somebody who can help them with compliance issues."
Another distributor making a big hit by following banking regulations is Zell Blackmon, president and CEO of National Bank Products. Blackmon credits his legal and compliance departments with developing regulatory forms to attract and retain customers. "[The departments] work together to absorb a tremendous amount of information," Blackmon says. While the compliance department monitors financial regulations, the distributorship's attorney follows federal and state court cases to determine how judges and juries interpret regulations.
When it comes to gaining and retaining accounts, Blackmon says compliance knowledge is invaluable. "We could do away with legal and regulatory forms and make more money right now," Blackmon says. "But [the forms] give us an entrée into new accounts, and our existing customers expect this service. In the short run it costs a lot of money, but we feel we have to do these things in order to stay competitive."
Making the Most of Mergers
Consolidation of state and national banks can mean fewer prospects, more rivals and lost revenue for distributors. "The billion-dollar banks are being taken over by multibillion-dollar banks," Hough says. "You may develop a good customer only to find out he's short-lived, absorbed by a bigger bank." Mark Wood, president of DFMC Corp., a distributorship in Carrollton, Texas, agrees. "The market is shrinking," he says. "Banks are trying to become more cost-efficient and provide better services for customers."One of the ways smaller distributorships are gaining business in a competitive market is by offering services large distributorships and direct-selling manufacturers overlook. "Today you can't say 'no' to small orders because they lead to other opportunities," says José Gonzalez, vice president of sales and marketing for Graphic Forms Industries, a distributorship in Rio Piedras, Puerto Rico.
"[Direct-selling] manufacturers won't even touch orders for 500 or 1,000 checks, but those orders give us an in. They open the door to larger quotations."
José Gonzalez
Vice President of Sales and Marketing
Graphic Forms Industries
Rio Piedras, Puerto RicoIn the battle for large accounts, Gonzalez says patience is his sharpest weapon. After two years of delivering small orders, Graphic Forms Industries acquired a million-dollar account with a bank Gonzalez says is the 35th largest in the nation. "We started out by solving a problem they were having with their steel die engraved business cards," he says. "After that, we got into snapout and continuous checks. [Direct-selling] manufacturers won't even touch orders for 500 or 1,000 checks, but those orders give us an in. They open the door to larger quotations." Soon after, Gonzalez provided the bank various checks in quantities ranging from 300,000 to 9 million. "We have a saying in Puerto Rico," says Gonzalez. "'The chicken's belly gets full one kernel at a time.' I believe our company will get full the same way, one order at a time."
Account penetration presents several hurdles, but Bill Petrik, co-owner of Central Valley Business Forms, says persistence pays off. "You can go on several trips before you get the person you need to talk to, but don't get discouraged," he says. "Instead of losing interest, you should keep calling until they tell you, 'Don't call back again.'"
Petrik's Visalia, Ca., distributorship relies on direct mail advertising to keep its name in front of customers. He offers ad specialties, fliers and promotional books to gain new accounts. "You also have to put your face in front of the people you're trying to interest," Petrick says. "Sometimes they see your name over and over again in the mail and just throw it in the trash. But when you come to visit and say, 'Did you get my flier?' they can't throw you in the trash."
Capturing Community Banks
As national and international banks consolidate, many distributors depend on sales to community banks as a reliable alternative to huge accounts. Billy Blackmon says he can't ignore the small banks springing up in his Florida and Georgia markets. "We don't ever foresee the small-town community bank not being there," he says. "For the next 20 years, I feel that community banking will be stronger than ever."
"I don't buy into the idea that we're heading toward a financial industry where people are not writing checks and making deposits. My feeling is there's going to be a forms market- it's just a changing market."
Billy Blackmon
Executive Vice President
National Bank Products
Warner Robbins, Ga.In order to retain community bank business, Blackmon diversifies his company's products. He says National Bank Products offers just about anything a bank uses, including coin wrappers, zipper bags, bill straps, fanfold and paper rolls, ribbons and ink jet cartridges. "It's a changing market, and we have to change along with the times," Blackmon says. "I don't buy into the idea that we're heading toward a financial industry where people are not writing checks and making deposits. My feeling is there's going to be a forms market-it's just a changing market."
When calling on small banks, Wood says it's important to remember that community banks require a different approach. "Larger banks have to be systems-minded because they're trying to provide efficient services," he says. "Local banks also are interested in better systems, but they want personalized service. That's the business they're in-personalized attention to the customer."
As a distributor who deals exclusively with community banks and credit unions, Wenk specializes in personalized service. "We've found that the bureaucracy of big firms is something we don't want to deal with," he says. "We deal with [small banks] like we're part of their company. For example, we have a client where the president himself uses our report in his budget meeting with his directors. He plugs our numbers right in. He doesn't even challenge them."
The financial statement Wenk provides breaks down his client's inventory by cost and location. "We can tell a client how much printing he has at our location, his main location and his branch. We approach clients with the idea that printing is a fairly high budget item, and we encourage them to treat printing as an asset that needs managing. It's almost like we're sitting on their board reviewing expenses."
If they appreciate your service, bank officers often return the favor, Wenk says. "Bankers are usually the most respected members of small-town communities," he says. "If a bank president thinks you're the best distributor to do the job, you're going to get other business." Wenk and his team recently proved themselves to a community bank in Michigan. Business Printing Plus went from furnishing cash-in and cash-out tickets to managing the entire account. He now provides counter forms, personal and bank money orders, promotional products, envelopes and stationery.
The distributorship also reduced the bank's costs and created a more efficient operation. "They had $40,000 worth of forms sitting on the shelf, and we helped bring the number down to about $15,000," Wenk says. In an environment where a roomful of forms can become obsolete in less than six months, forms management is a useful customer service tool.
With in-house embroidery and screenprinting production, Zell Blackmon says he can meet any financial client's marketing needs. "Banks look for retention value-products that keep their names in front of customers," he says. "Twenty-three years ago, banks were independent and not very marketing-oriented. Now there's tremendous competition among banks, so there's an extreme need for [ad specialties]."
National Bank Products offers hundreds of ad specialties in addition to embroidered and screenprinted wearables. Billy Blackmon says some of the distributorship's biggest sales come from non-traditional products such as report card holders. "What you tell a customer is, 'There are three banks in town. If you decide to go to the school system and provide report card holders to all the elementary schools, your name is not only in front of your customers when these children go home, it's also going to be in front of your two competitors' customers,'" he says.
The Financial Review
Despite consolidation, electronic conversions and other challenges in the financial market, distributors remain optimistic. Gaining accounts may sometimes be difficult, but the unavoidable truth is banks make excellent customers. Because they understand the importance of keeping accounts current, "banks usually pay on time, and that's a big deal when you're a small distributor," Wood says. In addition, the huge profit margin associated with financial accounts helps the industry maintain its appeal.Gonzalez says the financial industry is his company's most lucrative niche market. "Financial institutions are penetrating and controlling other markets, including insurance, leasing, and billing and receiving," he says. "The advantage of selling to this market is that if you get in and perform well, word gets around and many doors open."
Stacey Hawkins is an assistant editor at FORM Magazine.
Email her your comments.Thanks to General Financial Supply, Nevada, Iowa, and Diversiform Software Compatible Checks, Alexandria, Va., for assistance.
Increase Your Sales Volume with Security Documents
Dean Wenk, CFC, says his distributorship avoids obscurity by offering the financial industry's latest innovations. "We usually get a bank's attention when we start talking about security features," says Wenk, a sales and service representative at Business Printing Plus Inc. in Flushing, Mich. "Fraud is a real hot button these days."
Opting to rely on word of mouth to attract clients, the distributorship spends less than $2,000 a year on advertising, yet it boasts two to three referrals per week. The money orders recently produced for a bank in Michigan (right) are a good example of the distributorship's marketing strategy at work.
After receiving the money orders, Wenk's client was invited to a bank association convention where each association member was asked to bring sample security documents. Wenk says the speaker for the security features seminar was impressed with the products produced by Business Printing Plus. "The lecturer took one look at the money orders we created and said to our customer, 'Somebody has done you a big favor,'" he says. "During the presentation, he picked up our product and said it was one of the best examples he'd seen as far as safety features go. Now our customer refers some of its larger clients to us so we can get their checks in order."
The money orders are printed on 24# white MICR paper with blue ink. They have five safety features, including microprinting, screened endorsement backers, bleedthrough MICR, warning bands and split fountain printing. Split fountain printing utilizes two to three ink trays with different colored inks to create a blend of colors. On the money order used for amounts of $250 or less (top), blue ink is screened from 20 percent to 0 percent starting in the upper portion of the document. The bottom half is screened in green ink, and a white band runs through the middle of the document. The bank's logo, which is repeated in the background, appears in both blue and green ink.
The money order used for amounts over $250 (bottom) features a different design. Blue ink is screened from 20 percent to 0 percent starting in the upper left corner of the money order going right. The other side of the document is screened from right to left in red ink. Red and blue meet in the middle and blend to create a lavender color. The bank's logo is printed in the middle of the document, and the blue and red ink is screened in reverse order within the logo. "You would be hard pressed to copy [these money orders] and come up with the right shading," Wenk says.
