- April 28, 2017
- Posted by: Eileen Sullivan
- Category: Business Plans, Community Banking, Customer Experience, Innovation, Marketing, Retail Banking, Strategy
By Mark Gibson
How banks lost their “pillar of the community” status—and how to get it back.
Think about how far our industry has fallen in the eyes of our Main Street neighbors. Fifty years ago, the local banker was omnipresent at every important event and gathering, and rivaled the trust and prestige of the mayor and judge. What’s more, if you wanted to know what was happening with local businesses or your neighbors, the best places to find out were at the post office, the barber/salon, or the bank. Banks and bankers were truly pillars of their communities.
Fast forward to today, and our industry is still trying to regain the trust and shine it lost during the financial crisis. Even our community banks have been tarnished by the perceived greed and callousness of the giant few.
But the problem is deeper.
An increasing number of towns are saying “NO” to new bank branches. To quote a Boulder, Colorado councilman, as he voted for a moratorium on new bank branches, “They don’t attract people, they don’t attract tourists and they’re certainly not open in the evening. They’re just dead spaces.”
How did we go from “pillar” to “pariah” in a few short years?
We used to be an integral part of the community. Our employees were local. They were neighbors and community leaders. We knew nearly every family, and that helped us determine who was a good credit risk. We leveraged that local knowledge to invest in local businesses, non-profits, and community development projects.
Then something changed. Banks grew and consolidated. Lines of business replaced the local bank president. And loan decisions and charitable donations moved out of town. We were left with “branch managers” who had to ask permission to do almost anything.
While banks were changing, so were consumers. They embraced ATMs and mobile banking, making branch visits less necessary. We even encouraged them to do so, with the unintended consequence that the old adage out of sight, out of mind would make us comparatively less important and relevant.
Don’t get me wrong. Local bankers are still critical members of the community. But it’s different. They are often not decision makers, which makes it much more difficult for them to provide the financial support that many of our local communities need to remain vibrant social and commercial centers.
True community banks understand that the bank is only as strong as the community.
Banks that are authentic pillars actively engage in the social, educational, political, and economic fabric of every community they are part of. To them, ensuring that each child is well educated is not a charity program. It is an investment in a dynamic and qualified workforce for the bank and other local businesses.
In the same vein, collaborating with civic leaders and local businesses to transform down-at-the-heels neighborhoods is not a CRA initiative. It’s an opportunity to create a more vibrant residential and business community—a population that will need a bank to transact, borrow, and invest.
Being a welcome neighbor to community leaders means that we offer something unique and meaningful to the community. We provide counsel and advice to struggling and growing businesses alike. We provide educational programs to help people save and buy their first homes. We partner with local municipalities to help them improve their financial management and cybersecurity.
Marquette Bank is a living example of this principle. Located on the Southwest Side of Chicago, where many working families struggle to own homes, Marquette has been committed to providing affordable mortgages in the area since its founding in 1945. In a recent interview, Manny Jimenez, a vice president at Marquette, said, “It’s our market, these are our communities. If the homeowners are intact, if their neighborhoods are intact and successful, then so are we.”
Here are four actions a bank can take to restore its status as pillar of the community.
Action 1: Be a positive force for change.
It’s not easy to be a civic leader in most American cities and towns. Finances are tight and there is no shortage of problems. These problems are complex, but for the most part, they are solvable. Most bank executives got where they are by being strategic problem solvers. Why not harness part of that energy and talent to help make your local communities healthier and more prosperous?
JPM Chase’s broad initiative in Detroit is one of the best examples of this action, as they offered up employees to be subject matter experts, and contributed much needed funds to get the city on the road to redemption.
However, most regional and national banks have to prioritize communities. That leaves thousands of local communities that need attention. And that creates a supreme opportunity for community banks.
Action 2: Be proactive.
Don’t wait around for charities, events, and community groups to ask you for support. Determine who is critical to helping you implement your strategy. Then reach out to them with a broad plan of how a group of organizations can make a difference, with the bank playing a pivotal coordinating role. Pillars support and lead—they don’t follow reactively.
Action 3: Be Present.
To be a leader in a community, you need to live there and be engaged there. When recruiting commercial bankers, back-office folks, as well as branch employees, give thought to where they live and create a coordinated plan to have representation in each of your communities. Have a plan for community engagement and make sure every one of your colleagues has an important role to play in it. And remember, most banks take a short-term, self-centered approach to this. Move beyond attending chamber events and hosting dinners for accountants. Pillars do it because it’s the right thing to do, not because it advances the self-interest of the bank.
As Mike Reed, SVP of Retail Banking of Cambridge Trust attests, “You need to have tenured leadership to demonstrate winning—through your presence in the community—to the next generation of leaders. This mix is essential, and mentorship of experience to young talent is always a winning bet for sustainability.”
Look at what Citizens Bank of Edmund has accomplished with its monthly Heard on Hurd family-friendly gatherings. Local food, merchandise, and entertainment creates a positive halo around the Citizens Bank brand. Now that’s supreme pillar behavior.
Heard on Hurd is the monthly street festival sponsored by Citizens Bank of Edmond. Featuring a rotating array about 30 food trucks and 30 pop-up shops—along with live music from local bands—the event brings together area residents and merchants for an evening of fun and community spirit.
Citizens Bank reminds us that it takes intentional effort and focus to regain and maintain your pillar status. Your marketing or human resources leader can play a leadership role in these efforts, but your bankers need to be equally committed to staffing these community and center-of-influence events enthusiastically.
Action 4: Be vital and relevant.
Why have Boulder and many other (mainly affluent) communities said NO to more bank branches? Because banks have blindly followed the demographics and tripped over themselves to build branches in affluent communities without having a distinct plan to be a relevant contributing member of the community.
A better way is to proactively meet with community and city leaders, asking, “What does the community need? A new playground? A gathering place for seniors? An incubator for start-ups?” Who says a new branch contains only a teller line and a few desks? Many bankers roll their eyes when they hear that Umpqua has yoga classes and sells local business’s products in their “stores.” But I haven’t yet heard of a community telling Umpqua they couldn’t open a new location.
Where do these “crazy” ideas come from? From the local managers, that’s where. That’s right. Umpqua is behaving like a community bank, delegating as many decisions as possible to the local store. Be sure you are empowering your local leadership. And when you can’t, be sure that the answers are rapid and customer-centric.
To reclaim their status as pillars, community banks need only to dust off their successful playbook from years past.
Engaging with neighbors, helping individuals and businesses improve their finances, and doing everything they can to be good corporate citizens is not old fashioned. It’s just good business.