Three dimensions of success
How banks and credit unions battle for bucks
Deregulation, mergers, and the dawn of the Internet age have in less than a generation drastically changed the banking landscape. Gone is the era of days-long transactions and "bankers’ hours." Today’s customers demand an ever-broadening range of services and products. And banks and credit unions of all sizes must constantly adapt to fill the most fruitful niches of their industry.
And in the battle for bucks, Central Mass. and Metrowest boast plenty of competition. More than 80 banks and credit unions do business here. That list includes major national banks like Bank of America, large regional banks such as TD Banknorth, an abundance of smaller banks with multi-community footprints and a large number of credit unions, includes one of the nation’s largest and fastest-growing. All rely on different strategies to make themselves more attractive to consumers.
Convenience is key
One of the most important ways a bank can beat out the competition is to shore up its footprint, says James Briand, director of marketing at Middlesex Savings Bank in Natick. The bank has made a concerted effort to flesh out its presence within the 19 communities that it serves. By year’s end, there will be 25 branches and six separate ATM machines in its neighborhoods, many of them closer for customers in Acton and Boxboro who will need to drive less, Briand says.
With $3.4 billion in assets and hundreds of employees, Middlesex is the largest locally headquartered bank in the area, and operates from a position of strength in terms of the range of products it can offer. But the convenience factor is a major reason that people choose to bank there, Briand says.
But one needn’t be the biggest kid on the block to know the importance of convenience, says Pat Boudreau, manager of the Fenwal Credit Union in Ashland. With 685 members and $2.5 million in assets, it ranks among the smaller institutions in the area. It offers only savings accounts, auto and home equity loans. But its members – former and current employees of fire suppression equipment maker Kidde-Fenwal Co. –stick with Fenwal because it’s right inside the factory walls, Boudreau says.
"It’s like an having an ATM inside except you don’t have to press any buttons," she says.
The ATM analogy is on a lot of bank executives’ minds, says Brian Thompson, president and CEO of Commerce Bank & Trust Co. in Worcester. The ubiquity of ATMs owned by Bank of America, Sovereign or other large banks had been an attractive feature to some banking customers – particularly younger ones and those who make transactions at very late, or early hours. Many banks and credit unions have solved that problem through programs to refund customers fees for using other companies’ ATMs. Many have also joined the SUM network, a grouping of 2,800 ATMs throughout much of the state that are free to customers of member banks.
Unique products can give an edge
No-fee, cooperatively-owned ATMs like SUM, are just one type of convenient product that customers are drawn to, Thompson says. But in terms of new products, banks should try to pull out all of the stops to draw in and keep customers, he adds.
Of course, unique products can be indirectly related to banking. Consumer education has been a cornerstone of the baking goals for Digital Federal Credit Union (DCU) in Marlboro, says Tim Garner, vice president of marketing. And that goal led DCU to develop its StreetWise brand of advice material for members.
StreetWise tells people how to buy a car, a home, insurance and a variety of other financial services products. It was developed in cooperation with Remar Sutton, a well-known consumer advocate and is available free of charge to members and nonmembers alike on the DCU website.
"We believe that if customers come to see us as a trusted source of information, then they are more likely to give us their business," Garner says.
It is not the only banking institution in the free advice business. Webster Five Cents Savings Bank in Webster, for example, often sends FDIC-trained advisers to work with community members on ways to resolve credit problems or how to apply for mortgages, says Marketing Director Carol McGrath.
Service still a cornerstone
But even with unique products and widespread locations, there is no substitute for good ole-fashioned customer service, says McGrath. Customers like banking locally because they feel it’s easier to resolve their problems with a smaller institution, she says, so banks should strive to treat customers better than anyone.
"We pride ourselves on it," McGrath says. "We’re small enough that we can handle problems with a telephone call and we try to keep it that way."
And a big part of service is developing a brand and a place where people feel comfortable, she says. That was the idea behind the unusual design of the bank’s new Shrewsbury branch. There, paintings of smiling faces greet customers as they enter. A chandelier, funky carpet colors and big pewter piggy bank communicate to customers that they are not in a typical bank, she says. It helps develop the brand and draw people in.
Of course, there’s no need to paint the walls and hire a redecorator to show that service is crucial part of your business. Being accessible to customers works wonders, says Commerce’s Thompson.
"People like that they can come in, ask for the president of the bank, and I come right out," he says.
Anthony Battista, vice president of marketing at St. Mary’s Credit Union in Marlboro, says that with so much competition, banks and credit unions can end up spinning there wheels by focusing too heavily on individual competitors. Instead they should focus on their own services and products and ways to maximize the number of receptive customers and members.
Be it through convenience, new products, or better service, "that’s the bigger picture," he says.
Kenneth J. St. Onge can be reached at kstonge@wbjournal.com
Fighting all the way to the bank |
Competition is not always amicable, especially when it comes to banks and credit unions.
Earlier this month, the Massachusetts Bankers Association launched a website (www.creditunionruse.com) aimed at "creating awareness" of the "ruse" by which credit unions cost taxpayers billions of dollars by not paying taxes. As non-profit institutions, credit unions are a tax-exempt, and that amounts to a subsidy, says Bruce Spitzer, spokesman for the Boston-based trade group.
Of course it’s not all of the credit unions the MBA is targeting, just the big ones. And by big ones they mean those credit unions with more than $100 million in assets and that lack a "common bond" between members. In other words, Marlboro-based Digital Federal Credit Union (DCU).
DCU is the $3.4 billion, four-state credit union originally formed for employees of the now-defunct Digital Equipment Corp. If Digital is gone, Spitzer asks, then what is the common bond for its members if anyone can walk in off the street and join?
"We believe it has grown to the point where something needs to be done about it," he says. "They have grown far beyond their common bond and no longer resemble their original selves. If it walks like a bank and talks like bank, it should be taxed like a bank."
But Robert Kimmett, senior vice president of the Massachusetts Credit Union League, says that the latest uproar over the tax status of large credit union is just the latest iteration in a 50-year-old propaganda campaign. Banking, after all, is among the most profitable industries in the country, he says, and this is just an attempt to milk even higher profits through disassembling competing credit unions.
"It’s really a shame that bankers would devote that much energy to tear down a competitor as opposed to taking that creative energy to the market place," he says.
If the last five years are any guide, then both banks and credit unions are doing just fine. Between 2000 and 2005, DCU saw its assets grow nearly 150 percent to $3.1 billion. Local banking giant Middlesex Savings Bank in Natick saw its asssests grow 42.7 percent to $3.1 billion in that same period. The 10 largest credit unions saw their assets grow by an average of 54 percent. The area’s 10 largest banks did even better, with assets growing on average more than 66 percent in that same time period. (See chart.)
– K.J.S.
WBJ Web Partners
Most Recent
Most Recent
0 Comments