Distributors Can Bank on Financial Business
The financial forms market can be a cash cow for distributors who learn the tricks of the trade.
Although significant acquisition activity has changed the landscape of the financial services industry over the past few years, many forms professionals specializing in this market have remained adept at keeping their own businesses stable.
"It's not the business it used to be," said Ray Hough, president of the Ray Hough Company, Muse, Pa., which has specialized in financial markets for the past 32 years. "We have been through three kinds of merger mania—in the late 1970s, the early 1990s and now—and the current wave is detrimental to the independent distributor," he said.
Hough noted that overall, banks' earnings are down, and stockholder pressures for returns have resulted in "the worst price pressures in 30 years." Although he's seen some vendors pricing under cost, he emphasized value-added services.
"Some large institutions don't place any value on what we do; they just beat you up [on price]," Hough said. "The smaller banks appreciate us. Customer service is very important to them. We lost $370,000 in business to mergers last year, but savvy sales efforts resulted in replacing lost business and actually increased sales about five percent."
Still, Hough ex-pects to see one customer leave at the end of the year and to have another merge with a company he has no current relationship with. He notes that he has successfully targeted de novo, or new, banks to replace lost business.
David Puntney, Independent Forms Services, Joliet, Ill., is also dependent on this vertical niche—90 percent of the distributorship's business is with financial customers. "The mergers have hurts us, even though our accounts were mostly on the buying end of the deal," Puntney said. "You lose 20 percent to 25 percent of the volume when you go from two accounts to one." In the late 1990s, his firm had no growth and was struggling to replace lost accounts. A revitalized market over the past three years has restored Independent Forms' growth curve, he said.