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Community banks need a steady flow of prospects. A partnership with a successful retail concept virtually guarantees constant customer traffic.
April 22 -
Like the Postal Service, small banks must radically change their business model, expect more consolidations and mergers, focus on critical services and avoid relying on the U.S. government for help it could make things worse.
March 18 -
Big banks have discovered that mobile banking is their best bet for combating deep consumer distrust and rampant turnover. Small banks can overcome their lock on mobile by playing up the strengths of their existing business model.
January 30
Community bankers often argue that customer service is the differentiator between their small institution and the national bank down the street. They hold up the promise of personal, one-on-one engagement with customers as the best weapon in their effort to triumph over big banks' convenient locations and high-tech tools.
But the strategy is not working.
There are a few facts to consider. First, the obvious: Even if large national banks do provide inferior customer service, it's not slowing their growth. The number of small banks those under $10 billion in assetsdeclined 24% between 2000 and 2013, according to a
Moreover, while some customers may vow to ditch big banks because of poor customer service, they rarely make good on the threat. Forty-three percent of megabank customers say they are unsatisfied with their institution, according to the
It's also true that customer experience at big banks is getting better. National banks have focused on improving customer service since their reputations took a blow during the most recent financial crisis. And they have been successful. Consumer satisfaction with big banks now sits at an all-time high, according to the
Customer satisfaction among all retail banks is at 785 on a 1,000-point scale, according to the J.D. Power study. Big banks experienced the largest increase in satisfaction, which improved by 23 points to 782. Satisfaction with midsize banks, defined as those with between $33 billion and $2 billion in deposits, improved by only 11 points to 796. The gap between national and smaller institutions is narrower than ever.
Finally, the rising popularity of digital transactions is providing community banks with fewer opportunities to distinguish themselves with superior in-person customer service. Boston Consulting Group
Higher-quality customer service may be a viable differentiator between local competitors. But its not a winning long-term strategy to prevent national banks from gobbling up smaller competitors. Customers want convenience, instant gratification and products designed for their lifestyle. Thats what community banks need to deliver.
Of course, customer service still matters a lot to customers in some demographics. Baby boomers, for example, fondly remember the days of personal banking relationships. But if thats community banks' primary market, they'd better hurry: boomers are getting older by the minute.
Kevin B. Tynan is senior vice president for marketing at Liberty Bank for Savings in Chicago. He can be reached at
