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BANKING FORMS
How to Remain Successful in a Volatile Market.
BY KATHERINE LEUPOLDFORM, Nov. 1990
When Kenneth L. Finch Jr. heard that one of his clients, a small bank, planned to merge with a larger bank with five locations, he contacted the new purchasing agent. Within weeks of making a presentation to the new buyer, Finch obtained about 90 percent of the business at all six branches. "I explained how diverse we were," says Finch, president of Kenalex Printing Forms in Houston. "We are not just a forms company and not just an envelope company." Instead of losing an account he had never penetrated as much as he'd hoped, Finch turned the merger into an opportunity by acting quickly and aggressively.
Sometimes, that's what it takes to survive in the competitive, volatile banking market where mergers, bank failures, new technology and ever-changing regulations keep conditions in flux. Banks pay quickly and tend to be loyal, high-volume business. But banks expect their suppliers to be available at all times, to ensure they never run out of forms and to wait patiently while committees make buying decisions.
Earning Your Clients' Interest
Finch sells banks letterhead, envelopes, brochures, money bags and forms such as cash in/cash out tickets for tellers, DDA (demand deposit account—what banks call checking accounts) statements and certificates of deposit. Banks also buy forms for their loan department, internal processing forms—such as batch header tickets—coin wrappers, bill straps and advertising specialties from forms distributors.Finch says sales of money bags can bring in 5 percent of his account volume with a good account. Banks use several types of money bags for coins and bills for drive-ins, night deposit and other functions. Through experience and by asking lots of questions, he has learned about the options available—different zippers, locks, materials, inks and printing processes—to meet clients' needs.
With so many different departments in banks relying on forms, distributors may build relationships with everyone from purchasing agents and head cashiers to marketing managers, data processing managers and operations officers. It depends on the product and the size of the bank. For example, Finch often gets the marketing manager to approve the copy and design of an envelope if it provides promotional information. Tony Chandek, an owner and principal of Logical Forms Supply Co. Inc. in Hales Corners, Wis., talks to operations department employees or those in the returns department when selling his patented item return carrier, but may rely solely on someone in purchasing when selling more traditional forms.
Chandek's firm, which he founded 14 years ago with his wife, Pauline, also an owner and principal, offers QuikClear, an item return carrier for use on high-speed reader/sorters. QuickClear, available on bond stock or translucent material, can help prevent check loss, protect against destruction of original endorsements and can be identified easily using bright stock. The carrier was patented in 1987 and became more popular in 1988 when the Fed passed Regulation CC to speed check processing. Chandek exhibits the product at banking industry trade shows and advertises via direct mail. The carrier also has helped him get other forms business within a bank.
No matter who buys the forms in his client banks, Finch tries to maintain contact with as many levels of management as he can—all the way up to the president, if possible. "I do this in case a bank changes hands so I don't go out the door with the purchasing agent," says Finch.
A Changing Marketplace
Those selling to banks quickly become familiar with rules set by state and federal regulators. Changes in rules could mean new products to sell as well as a different customer base. When the Federal Reserve adopted Regulation CC, which governs the processing and clearance of checks, Finch capitalized by designing brochures for banks to notify their customers of the new requirements.George Altizer still isn't sure how a recent rule change will affect him. Altizer, president of Performance of Memphis Inc., says Arkansas banks can now acquire banks across county lines, which had been prohibited by state law. He believes the change will mean more mergers and centralized purchasing. Altizer, who sells to banks in Tennessee, Mississippi and Arkansas, says he has already lost business that way in Mississippi when clients merged and moved purchasing to Jackson, outside his firm's territory. But Altizer doesn't worry. He says there are plenty of banks he doesn't sell to, and independent banks continue to open nearby.
Most distributors selling to banks have won and lost business during mergers. The same is true of FDIC takeovers. For Rusty Stackhouse, the headlines about bank failures and FDIC rescues hit home four years ago. Stackhouse, president of Heystack of Texas Inc. in Cypress, Texas, lost his first of several banking clients when the FDIC closed one of his clients. To make matters worse, the firm had just installed a new computer system and ordered a slew of new forms.
Stackhouse found out about the closure from the newspaper, then received notification from the feds that it would accept no further invoices. He lost $6,000, $3,000 of which the FDIC has repaid. Stackhouse doesn't know when—or if—he'll get the balance. Once, banking forms comprised about nearly three quarters of his business. Today, that figure is 50 percent, and he pursues other markets more vigorously.
Discovering a Niche
Within the financial institution market, Ray Goodson, president of Landmark Forms & Systems, a distributorship in San Ramon, Calif., has carved his own niche. Years ago, when a credit union client installed a data processing system, Landmark started building a relationship with the data processing firm.Now, when the firm installs a system, it hands clients an information packet on Landmark, which includes sample forms, a price list and an order form.
Landmark often gets the stock form business and, the first time around, the custom business. But because system users are located nationwide, Goodson often loses custom business to local sales reps. He also sells ribbons, toner cartridges and other supplies for the system.
"The (data processing) firm has grown from five to 120 employees in nine years. We grew along with them by getting leads and continuing to market to their customer base," says Goodson. "We make it one of our primary marketing efforts to be knowledgeable about forms and supplies for the system." The data processing firm recently introduced a printer that prints cut sheet and continuous forms. Goodson designed forms for the new printer, then the data processing firm's programmer developed the programming around his design. The data processing firm later presented the forms at a users' group meeting.
About 75 percent of the firm's sales to credit unions come from sales of products for that system. "Ours is certainly not a unique relationship," says Goodson. But it has required solid relationships with credit unions and the data processing firm.
Selling to credit unions also means learning a new vocabulary, which differs from that of commercial banks. Customers at credit unions are "members," and Goodson has sold continuous paper membership cards affixed to carriers. Credit unions do not send payment books to loan customers. Instead, they send payment coupons—continuous perforated forms that resemble payment booklets, says Goodson.
Many credit unions use service bureaus to print, process, insert and mail monthly and quarterly statements. Although some credit unions use stock forms provided by the bureau, Goodson tries to get these credit union clients to use custom statements. He then provides the statements to the credit union, which ships them to the service bureau. In some cases, he warehouses and drop ships them to the service bureaus.
If commercial banks have their way, credit unions will be forced to change the way they do business, which will ultimately affect forms distributors. Banks are trying to strip credit unions of their tax-exempt status, which generally allows credit unions to offer higher savings rates and lower loan rates then many commercial banks, says Goodson. If that happens, many credit unions would be forced to raise their loan rates and lower savings rates to pay taxes, which could put them out of business. "We want to remain diversified," says Goodson. "If something like that happens, we won't be cut short with all our eggs in one market."
Keeping Up
Distributors say they keep up with the industry by asking clients questions, reading publications from state banking organizations and scrutinizing local newspapers. Those selling loan documents usually must work closely with a lawyer to ensure the documents meet federal regulations, says distributors.Goodson attends vendor nights sponsored by local credit union chapters. "We try to network with people to get to know them," says Goodson. "You definitely must get inside the credit union movement. Like any industry, they (the members) are very cliquish." He also has advertised in national credit union publications. Similarly, Altizer uses a banking directory to obtain prospects and the names of key personnel within banks.
Technological changes make keeping up as important as ever. Finch says banks will probably implement electronic data interchange in four to five years. He also says that as banks and other clients get desktop publishing systems, distributors will need to have a solid understanding of them. He thinks clients, who do not have the graphics experience of forms distributors, will want to tinker with forms and other printed products on computer, then turn them over to distributors for refinement.
Chandek says the use of electronic imaging to process and return checks—such as the way American Express returns receipts to customers—may take hold in another 10 years. He still believes that banks will need paper checks as proof of the transaction, and says that image processing can be slower then current methods. Stackhouse thinks banks will eventually adopt imaging for the return of checks to cope with spiraling postage costs.
Katherine Leupold is an assistant managing editor of FORM magazine.