Over-Banked and Under-Professional
A student at a recent banking school stated that we are over-banked in many of our agricultural and rural areas in America. Later, a farmer and rancher panelist voiced his concern that lenders tend to be under-professional. Wow, what a dilemma! Let’s examine both sides of this coin.
First, there are about 2,500 agricultural banks and 97 Farm Credit associations in America. Throw in the non-traditional sources of credit such as Deere, cooperatives, FSA and a few international giants and one might make the case. Many small rural communities will have four or five banks or branches. It is interesting to note that in my travels to Canada and other international agricultural hotspots, I have noticed a few institutions make a large majority of the loans.
Regardless, many institutions lack professionalism in dealing with their customers. First, many feel technology is a lure for everyone. My perspective is that technology is only as good as the high touch human interaction with the customer. There needs to be a balance between high tech and high touch.
Next, too many lending institutions think only in the short run. Yes, stockholders are important and next quarter’s results should be strived for; however, one must also balance it with long-term perspective. Many institutions are focused too sharply in the short run and tend to be cyclical agricultural lenders, which hinders their professional image in the agricultural and rural community.
Concerning professionalism, the agricultural and rural areas are in for some big changes in lenders. Eighty percent of FSA staff will be eligible to retire in five years. More than half of Farm Credit and banking staff representing agriculture will also be eligible. The truly professional organizations are now in the process of building ‘bench strength’ to maintain their professional image and services to farm and ranch customers.
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Editors' note: Dave Kohl, The Corn and Soybean Digest Trends Editor, is an ag economist specializing in business management and ag finance. He recently retired from Virginia Tech, but continues to conduct applied research and travel extensively in the U.S. and Canada, teaching ag and banking seminars and speaking to producer and agribusiness groups.
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