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IN EVERY CALAMITY, THERE IS OPPORTUNITY It’s hard to imagine a more bleak time to be in financial services. It seems like every day’s
newspaper brings a fresh set of doom-and-gloom headlines, such as... - MidStates Bancorp reports record quarterly loss
- Lehman Brothers files for bankruptcy protection
- Citicorp to lay off 25,000 workers
Discerning consumers, of course, have recognized that the problems have primarily been
confined to investment banks and the national/global bancorps with substantial investment
operations. It was mainly their managements that drank the KoolAid of sub-prime mortgages
and their exotic derivative securities and credit-default swaps. Regional/community banks and credit unions, in contrast, by and large prudently chose not to
put their depositors’ funds at undue risk and continued to make money the old-fashioned
way: they earned it, by writing top-quality mortgages and business loans. They may have
missed out on a couple of big earnings years at the top of the bubble, but that’s a small price
to pay for not being on Federal life support today. In fact, we think that this scenario presents the smaller, local banks and CUs with a golden
opportunity: to aggressively seek to take depositors and small-business customers
away from the large national banks. Those customers have been silently disgruntled for
some time, as wave after wave of consolidation among the large institutions (some recently
involving foreign investment or outright ownership) has left them paying higher and higher
fees, often for declining service ...especially if “their” branch was closed to “eliminate
duplication”. And now with the present crisis, they also have to wonder about the safety of
their deposits and whether they’ll be able to obtain even the same level of credit they were
eligible for less than 6 months ago. In short, it’s a great time to step forward and say, “That may be your experience with the big
guys – but it certainly wouldn’t be your experience with us.” REHABBING THE SHELL-SHOCKED LARGE-BANK CUSTOMER
Many large-bank customers actually started out as customers of a community/regional bank
that was swallowed up by a succession of ever-larger banks. They have fond memories of
the helpful, everybody-knows-your-name service in their original bank; but they may also
associate it with a somewhat primitive level of data processing, and perhaps with isolation
from the electronic financial networks that were long the province of the largest institutions.
(Some of these customers still assume that a bank must be of a certain size to do onceexotic
things like wire transfers and direct deposit.) next >>
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