Perer: How are you leveraging technology and what tools do you find successful?

Barr: We’ve had a bit of a youth movement across all facets of our team within the last 24 months from originations, marketing, portfolio/relationship management, etc. This has brought new ways of originating and embraced old ways just the same. As much as I would like to engage every new technology service provider within SFNet, we have had measured success with tools that help us better identify customers, engage with them, and develop strategic relationships.

Kwasny: Unfortunately, we still rely more on “meat and potatoes” calling efforts for the bulk of our business development activities. Having said that, we have seen success with advanced features of LinkedIn as a means for qualifying prospects, researching, and ultimately making introductions. We also have been working with AI to identify products and service needs based on profile and behaviors. We are also currently developing digital lead generation solutions.

Marasco: I rely heavily on our CRM system and expect my team to be active users. The calling and coverage metrics help optimize and monitor the team’s efforts. It may sound simple, but I also research everything about a prospective borrower online. Access to news outlets and social media to research the companies and management has enhanced the due diligence process.

Payne: For us, we are always striving to leverage technology and automate pieces of the business where it makes sense. Our entire portfolio management system has been built from the ground up internally, and we’re very proud of that. Like most others, we leverage our CRM to the best of our ability but that’s an area where we can certainly improve. We have not been keen on some of the newer email technologies that are available, but we have started to come around to some of those. The insights that we could gain would allow us to be more strategic with our time.

Perer: What are the attributes you look for when hiring BDOs?

Barr: There is not one strategy that fits all BDOs, so keeping an open mind as to how successful BDOs cultivate referral sources, originate transactions and develop relationships is important. Non-negotiables for me include a strong reputation in the marketplace, willingness to be a team player and integrity.

Marasco: I look for a combination of strong deal-making and credit skills along with a proven network of referral sources. Also, I seek those who can communicate naturally and authentically. Excellent listening and problem-solving skills are also key to success. After all, we are problem solvers and solution providers at the end of the day.

Kwasny: As I mentioned earlier, our team has been working together for a significant period of time. This has generated a culture that we operate within, and  it guides everything we do. In addition to being a strong candidate with tangible attributes (network, history of success, etc.) positioned to generate new deal flow, it is important that the BDO shares the same vision for their role, and the team. It is so much easier to accomplish goals when you have a shared vision, and everyone is pulling in the same direction.

Payne: I do not believe that a great BDO comes in a pre-packaged box. It’s not as easy as saying ‘you took this course and got this grade, or your resume shows that you did xyz’ and then that person is going to be a slam dunk fit. Sure, all successful BDOs have certain traits in common but their strengths and weaknesses typically vary. Persistence and resolve are key. Those are non-negotiables. This job will beat you up and spit you out and we need to make sure that the folks that we put into these positions can rise to the challenge. Overlay cultural fit onto all of this and effective hiring becomes more of an art than a skill.

Perer: Do you ever equate your job to coaching in sports from the sense of building a team in a competitive world?

Barr: Funny you ask this question as with all my free time I coach my two boys in travel basketball. There are a lot of parallels to this role and coaching in the competitive environment we operate in. Over the past fifteen months we have made changes to the ABL originations team by adding six seasoned BDO team members. Similar to coaching basketball, my view is recruit, onboard and nurture the best talent possible, setting the team up for maximum success. If done properly, I have removed obstacles for the team and I have them squarely focused on serving their marketplace. Of course, the good news is I don’t have to yell at our BDOs to box out and play defense like I do with my eight- and ten-year-olds!

Marasco: 100 percent, a winning team has players that trust and support each other. BDOs, by nature, are competitive and sometimes do not want to share contacts or market intelligence. We have a small team spread across the country, and we talk regularly about what we are seeing in the market with the expectation that it will produce stronger results for all.

Payne: All the time. Greats like John Wooden take an approach that transcends sports. This guy won 10 NCAA men’s basketball championships (and 7 in a row!). “You can’t let praise or criticism get to you. It’s a weakness to get caught up in either one.” Now what does that have to do with basketball? Nothing. And everything. Same for ABL. It is important that our originations team is comprised of high character, like-minded people who want to win. It’s important to have fun (sales retreats), work hard at practice (contribute to idea-share on weekly pipeline calls), and execute (win and close deals).

And then there’s this Nick Saban quote…“What I would like for every football team (competitor) that we play is to sit there and say, ‘I hate playing against these guys (Siena). I hate playing ‘em. Their effort, their toughness, their relentless resiliency to go out every play and focus and play the next play and compete for 60 minutes in the game -- I can’t handle it.’...That’s the kind of football team (originations platform) we want.”

Kwasny: Yes, I have been known to say I learned more playing sports than I ever did in school. Maybe that says something about my grades or educational aptitude, I do not know. But seriously, there are a lot of similarities in coaching a sports team or a business team trying to accomplish their goals. You must prepare, put in the work, execute your strategy or plan and be flexible to adapt to the situation as it unfolds. If you do all these things, you WIN! Our team loves to win and hates losing.

As a manager, I spend time reviewing events. What worked, what did not work, why did we win (let’s do more of that) and why did we lose (let’s try to not do that again). The competitiveness of business development and competing for deals is what keeps the job fun and exciting.

Perer: Has the pool of qualified applicants increased or decreased over the past ten years and why?

Marasco: The pool has decreased. Young people rarely choose a career in banking as they did when many of us started in the business. That said, there is hope that we will see more interest in lending, given the broader visibility of non-bank lenders and private credit. On a relative basis, these lenders have less compliance and regulatory burdens than banks and can represent an attractive career path for younger job seekers.

Kwasny: I think most people in the industry would suggest the labor pool is getting older and smaller through retirements and reduced new bankers. The industry is facing the challenge of developing the next generation of leaders. Why? Asset-based lending is a technical sale. To be successful as a BDO you need to be able to sell the features and benefits of the credit structure and how it assists the client in managing working capital. The traditional way to develop into a BDO is by growing your career in asset-based lending through field examination, underwriting and account management prior to sales. Many younger professionals are looking for more instant promotions and have elected to pursue other financial services roles.

Perer: How is the bank-ABL BDO job going to evolve as ABL continues to become a product instead of a business?

Barr: CIBC’s ABL team is a line of business within the bank. We squarely want to remain this way. I’ve found the shift to ABL as a product has affected the continual network development and relationship-building scrappiness an external BDO needs to be successful. I want our team to build relationships leading to trusted advisor status versus being more internally focused.

Kwasny: At Huntington Business Credit, we remain a business line and vigorously defend that model versus moving to a product. Having said that, my impression is that the BDO role in a product environment becomes more of a structuring and credit underwriting position versus business development. For traditional BDOs the change would be significant.

Marasco: Coming from the bank world and witnessing the productization of ABL, there remains an opportunity for banks to train BDOs to work with commercial lenders on new opportunities. On the other hand, and less virtuously, some banks have and will obviate the role of the ABL BDO by ceding the responsibility to prospect, sell, and deliver an ABL solution to commercial bankers.

Perer: Ten years from now will there be more non-bank BDOs or less?

Marasco: More. As the non-bank world continues to attract capital, BDOs will be needed to represent non-bank firms.

Kwasny: Non-bank asset-based lenders have increased and carved out a specific niche in the market. I do not think it is logical that they will continue to enter the market at the rate we have seen in the last few years. However, they are here to stay, and my sense is that the number of players will remain fairly consistent going forward with players entering and exiting the industry.

Payne: It’s hard to say really. I think it depends on when the market has decided we are ‘over-subscribed’ on lenders in the space. Even then, I could see specialization (industry, or other) become a more common practice within the non-bank segment. On the other hand, there’s the long-awaited fintech revolution that would dial back the need for human intervention in lending. I don’t see that as likely and thus, I’m going with more BDOs.

Barr: Charlie – if I had a crystal ball and could accurately predict tomorrow, let alone 10-years from now, I would predict I would be doing something very different!

Perer: What is a perception you have about today’s ABL market that is not widely shared?

Barr: ABL is best suited as a line of business versus a product. Some of our best relationship developers across the bank are part of our ABL BDO team. Our team is rich with talent, has a depth of long-standing relationships, and wins differently than our commercial bank. While we have an excellent relationship with our commercial banking colleagues, our team wins by being a line of business. We control our process from our first marketing call to our closing dinner and subsequent relationship management. We learn the reasons behind client issues directly from the client. Our opportunity to structure and be creative is done in concert with an owner, CFO or Controller. Our customers and our external partners know what we need and why we need it. Our message is clear, direct and delivered to the decision maker to continually build a long-term partnership.

Kwasny: I think ABL as a product will continue to evolve. Twenty years ago, ABL came with a stigma and was viewed as a last resort type of financing. Today, especially in the bank environment, the structure is more accepted as an efficient way to manage working capital for asset intensive businesses. Today’s company CFOs have a dual responsibility to fund their organizations with an efficient cost of capital and provide flexibility in liquidity. ABL delivers in both. Today, we have clients who have the option to finance their operations in several financing structures but choose an ABL structure for those reasons.

I would not be surprised to see Banks lean more into ABL as they become more regulated, leaving the leveraged lending and cash flow financing to non-bank lenders.

Payne: That asset-based lending has not evolved. I think ABL has evolved considerably since its early days and particularly within the last decade. To say that there has been noteworthy interest from some of the world’s leading asset managers would be underplaying the influx of new players and the volume of capital that backs them. I expect this trend to continue. That said, I think the industry remains positioned for continued evolution with regards to structure and overall investment thesis into the assets on which we will lend.

Marasco: While the market is highly competitive, the middle market is vibrant enough for most market participants to be successful. Lenders with a well-trained originations team and defined market niche will continue to thrive.