Before granting loans, banks need to know that they’ll get their money back. As a result, banking institutions have become experts in quantifying risk through calculations. But what if the calculated risk appears riskier than it should?
“The financials looked terrible,” StoryHow™ PitchDeck user Raina described one such loan application. With numbers that fell below acceptable thresholds, the bank summarily refused the loan.
“Sometimes the people looking at the numbers don’t have a chance to look people in the eye,” she said. But she had, and as a result, Raina worried about a different kind of risk–the risk that a good customer with a rapidly expanding enterprise might take their banking business elsewhere. “If you aren’t there for the worst, you aren’t wanted during the best.”
Raina wanted the bank execs to take another look at this customer, so she set out to answer their primary question. “Why can’t they just give us good financials?”
Her goal was to answer the question through telling the customer’s backstory, but she needed to be careful. “Writing opinion or bias into a financial analysis is highly discouraged,” Raina said. “You must be objective and refrain from using personal or non-objective language.”
Luckily for the bank, Raina studies storytelling. She knew that the absence of fact from a spreadsheet doesn’t negate its existence, and proceeded to weave the missing facts into a coherent backstory.
She described a multi-generation, immigrant family that owned a chain of popular auto service centers. Capitalizing on the community’s enthusiastic acceptance (and rating it as the best in the area), the family funded an aggressive expansion plan through bootstrapping. Seeking to accelerate their growth beyond what they could self-finance, the customer approached their bank for a loan. As we already know, that didn’t go over so well.
Successful businesses overcome obstacles. So, rather than pausing due to the setback, the family just continued to self-finance their new facilities.
“They persevered,” Raina said. “Even when we said no.”
Raina concluded that the financials looked weak because the family had focussed on short-term growth instead of the bottom line. But, she also pointed out that this growth wasn’t haphazard. On the contrary, the family was executing a long-term plan that included grooming the next generation to take over the business.
“Succession is very important to a bank,” she said.
Raina’s document revealed parts of the picture that the spreadsheet had obscured. “It helped them look beyond the spreadsheet and to give the customer a second look. The bank is now cultivating the relationship.”
“It got them interested because of the way I wrote it,” she said. “I addressed the points of risk that evoked emotion without using emotional language.”
Which is precisely the role of a business storyteller.