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Community Banks Benefit From Big Banks' New Fees

Community banks are finding opportunities to attract new business in the wake of customer frustration over new fees recently announced by large banks.

Offering the $5 a month to new customers is an investment that will help the bank gain more business, keep up with lending and create more revenue. "Our loan demand locally here in the Tampa Bay area has skyrocketed, and we want to be able to fund those loans, so we need more depository customers," Burgess says. "If we can take in those deposits and make loans in the community and make a fair spread on the difference then our customers will do well."

Both Middlesex Savings Bank and Community Bank & Company tout the loyalty and satisfaction of their existing customers and are leveraging that enthusiasm to encourage more referrals. "We're letting our customers know that if they know someone who's going through this [new fee change] that it's a great opportunity for referral," says Briand. He adds that Middlesex has toned up its referral program recently by increasing the incentive, which should boost its already high referral rate.

Burgess notes that Community Bank has a customer referral program in the works that's set to launch at the end of October. However, he notes that gaining new business goes beyond referral incentives and fee advantages. "The number one way that we attract customers is by providing a different level of service than the national banks offer," he says. "For instance, we make loan decisions on residential mortgages on a daily basis. We can close a residential mortgage in as little as a week. This is a very different sort of speed than most customers who deal with national banks are used to."

Similarly, Briand says that while situations such as the current customer dissatisfaction over bank fees do create opportunities to gain new customers, he prefers to focus on a long-term outlook. "Take the windfalls if they exist, but it's really about keeping your name and your value proposition out there month after month, year after year," he says. "We can't control the moment that someone decides to switch. It's usually about loss of service on the other end. We need to make sure that when they do get to that moment, we're in their mind, and they see us as a positive alternative."

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