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PCBB Banc Investment Daily May 07, 2013
Banc Investment Daily
May 07, 2013

CRYING FOR GROWTH AND GOOD HEALTH

There is a strange event in Tokyo called the Nakizumo Crying Baby Festival. At the event, parents bring their babies to a temple where novice sumo wrestlers goad babies into crying to promote and celebrate their growth and good health. The competition part involves figuring out which baby can cry the loudest and longest. Summer is fast approaching, so as you get on an airplane here in the US, enjoy similar screaming contests among babies on airplanes as you head off toward tranquility and vacation. Instead of frowning, think about the larger purpose and smile instead.
Many community bankers can relate to a wish for growth and good health as the industry has left many even tempted to cry at times. It does little good, so we may as well search for ways to profitable growth today and down the road.
The low interest rate environment offers ongoing challenges, but competition is an enormous factor as well. Community banks have competition on many different levels and from different sources. One of the most important things a bank can do is determine which of its business customers are losing their competitive edge and which are successful, so you can focus energies where they can best be leveraged.
When it comes to competition, community banks know the biggest banks are probably the biggest threat. They seem to continually "buy" the customers by lowering lending rates to rock- bottom levels that add pressure to performance. Community banks can be successful, however, in promoting local knowledge and decision-making, alongside personalized and customized service for each customer. Of course rates matter, as years of advertising based on rates has taught customers lending rates should be a primary factor in making a banking relationship decision. Community banks certainly have to stay competitive to book loans, but then you must move quickly to change the topic.
If your bank can change the focus of any customer interaction to the benefits of having a more flexible, local bank that meets that customer's specific needs, there is room for discussion. One factor that must be addressed is that while your bank is smaller than the biggest banks, it can certainly meet the needs of the customer. To gain business relationships, it is imperative that your bank have the technology and expertise to do what customers require simply and effectively. Your bank probably can't afford to spend lots of money on technology, so you must leverage personal and experienced help with strong but simple technology solutions.
In the alternative, if you find yourself in competition with another community bank or credit union, technology matters. Have your talking points down so you can capture sophisticated relationships no matter the size of the business. Don't be afraid to promote in detail how local your bank is and how that translates into knowledge and expertise for local businesses. Publicize the community projects your bank supports, put photos of staff on your web site and Facebook page. Ask your good customers for referrals or even if they would appear in a testimonial promotion to help spread the word. A little thought and practice can take your bank a long way in capturing new clients and make sure you won't need to resort to crying in order to promote growth and health.