Shop Talk: Q&A with John Merrill, Fidelity Bank
Photo/Christina H. Davis
John Merrill, Fidelity Bank, President, chief financial designer and chief lending officer
John Merrill has spent most of his career in big banks. He held a number of high-profile roles at Sovereign Bank, including Massachusetts market president. Now he’s gone to Leominster-based Fidelity Bank, where he’s helping with a big push to expand the bank around Central Massachusetts using a strategy the bank refers to as “Life Design.”
>> What made you move from Sovereign to Fidelity?
Sovereign was purchased by Santander, a very smart bank, a good bank, but a big bank, and it gets harder and harder to deal with small- to medium-sized customers. I always knew that eventually I wanted to come back to Central Massachusetts, where I live. There is tremendous opportunity right now in Central Massachusetts. The larger banks are a little distracted. When you’re managing the bank on a quarter-by-quarter basis, it’s really hard to make good systemic changes in the business. A lot of the smaller banks that got into community banking before the market turned probably had less experience, and they’re struggling with some asset quality issues, or don’t have the product sophistication or the lending sophistication to really handle companies’ needs. So right now a bank like Fidelity — that has the sophistication, has the commitment — can really help companies.
>> When I hear people talk about things like “Life Design,” I think, oh, it’s a marketing gimmick. What does it actually mean concretely on the ground?
It’s nothing revolutionary. It’s putting the customer first. A lot of banks say they do that. But we have a five-step process to really understand not only what the customer wants, but their needs. Instead of jumping to sell a product because you want to meet your sales goal, it’s taking the time up front to ask the right questions, just discovering the real need, getting all the information you need, spending some time analyzing that information and coming back with thoughtful recommendations. In the short run, we might lose out on a quick sale. In the long run, we’re developing a very loyal customer.
>> What do you think of the community banks that are already in Worcester?
Well, there’s been a lot of consolidation. There are some really good organizations that are a little distracted by their new ownership and new approaches. And because this not a primary market for the big banks, there’s a great opportunity. That’s why Fidelity invested in Worcester about 5, 6 years ago. Our Shrewsbury Street branch is the fastest-growing branch in Central Massachusetts.
>> Right now Fidelity Bank has assets of $521 million (as of June 2010). Do you have a goal for where you’re going?
The bottom line is we want to grow, and we want to grow within Central Massachusetts. We do think because of the demand on the industry right now, some smaller banks might need partners. So we think there’s probably opportunity for growth through some mergers and partnerships, but we’re not making that a part of our plan. We want to grow organically.
>> What about regulation? A lot of people in banking say new regulation is going to hurt them. What do you think?
There’s a lot of uncertainty out there. There’s no question the cost of compliance and regulation is going up. The smaller a bank you are, the harder it is to spread that fixed cost. When there is a crisis, it usually means the pendulum was too far to the right, because there’s too much money flowing and not enough controls. So you’ve got to swing the pendulum all the way to the other side and overreact.
>> There’s talk lately that free checking is ending. Is that happening?
I’ll tell you this: If banks big and small have had issues in their investment portfolios, and if they have higher provisions for asset quality, and margins are contracting, well, you’ve got to have revenue somewhere. I think all financial institutions are looking at ways that they can make money. I think you’ll see signs go away for free checking for a while and then that’ll go full circle again. But even with free checking, if you really read the fine print, there’s always been some cost to the customer.
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>> Can you talk about the way that the bank is expanding?
When I was running business banking for Sovereign, Central Massachusetts was a good market but wasn't a primary market for me to run my business. I was going to invest more in the Bostons and the Philadelphias. There's a million people living within 25 miles from downtown Worcester, and there are great markets like Worcester and the towns around it. We have tremendous market share in North County, and as you go out to MetroWest, there are really a lot of exciting markets. So not big enough to be the top priority for the larger banks but big enough for a local bank to really do well.
Correction:
An earlier version of this article, which also appeared in the Nov. 8, 2010 print edition, incorrectly noted the amount of assets at Fidelity Bank. The bank reported $521 million in assets as of June 30, 2010 to the FDIC.
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