Category Archives: Community
What’s that you say? You’re not missing out on technology. You use social media. You use email newsletters and blog frequently. You offer online banking, mobile banking, bill pay and PFM. Your customers/members can open accounts and apply for loans online.
You’re right, most of you do use all of these tools. But how many technology companies are your customers?
Hmmm, was that a scratching record and crickets that I heard in the background?
I was reading a post on OnStartups the other day and saw an interesting statement:
Best Bank for Working with Startups:
In case you haven’t heard of them, Silicon Valley Bank has more than $19 billion in assets and pretty much caters to the startup community. Here are some interesting stats:
- 50% of all VC-backed companies in the US bank with Silicon Valley Bank
- 2/3 of all VC firms bank with Silicon Valley Bank
- 70% of Businessweek’s Top Entrepreneurs are Silicon Valley Bank clients (May 2011)
- 68% of WSJ Top VC-Backed companies are Silicon Valley Bank clients (March 2011)
- Only global bank dedicated to the innovation sector
Silicon Valley Bank has branches in the startup hotbeds of the US and globally. The way that Charleston, SC is growing, I wouldn’t be surprised to see a branch here soon.
Now correct me if I wrong, but right now technology is considered a growth industry. In fact, over the last couple of years, you hear a lot more about startups in general. Is your community bank or credit union pursuing these new prospects? I promise you that your big competitors, such as Bank of America, Wells Fargo, TD Bank, Citi and JP Morgan, are.
One thing I’ve heard over and over from entrepreneurs is they try going to a community bank or credit union first, but are turned down. The larger bank however, accepts their business and works with them. Because that larger bank helped them get started, entrepreneurs feel a fierce loyalty to them.
This is an instance where “all our decisions are made locally” comes back to kick you in the proverbial tail. Your chance of getting any future business with this company, when they are successful later, is pretty low. Your only hope is that the big bank will do something, such as lower a credit limit when they need it, that will cause extreme dissatisfaction.
The sad part is I see this happen so many times here in Charleston. The Charleston area has been in the news lately for being entrepreneur friendly. Here are a few awards the area has received recently:
- #11 Milken Institute’s “Best-Performing Cities 2011”
- #1 nationally as the top tourist destination in America, Conde Nast 2011
- #1 2011 Metro Areas with the Largest Percentage Growth in College Degrees over 10 Years, Brookings Institute Study, Wall Street Journal
- #8 2011 Best Cities for Job Growth – Mid-Sized Cities, New Geography
- #3 2011 Small Business Vitality Scores, The Business Journals
- #4 2010 Small Business Vitality Scores, Portfolio
- #7 2009 Best Cities for Technology Jobs, Forbes
- 2009 Best Place for Start-Ups, Mount Pleasant cited as best city in South Carolina, Business Week
Even with all of that, I don’t know of a single community bank or credit union in the area that actively pursues the startup community. In the past I’ve worked with BarCamp Charleston and contacted local FI’s about sponsoring the event. In the three years of BarCamp Charleston being held, no bank or credit union has ever been a sponsor.
This is a huge opportunity that is being missed. It’s sad to say, but it almost seems that because BarCamp is organized by a bunch of enthusiasts, it’s not deemed a “worthy event”. I noticed that plenty of FI’s send representatives to local chamber events. If they only knew how many successful business owners attended BarCamp.
Now, in your community I’m sure there are plenty of businesses that would love to bank with someone local. My advice is to get them while they’re still in a growth stage and can really use your financial expertise. Take the time to meet with them and learn their business. Because when they become that million dollar company and big bank comes-a-calling for their business, they’ll remember you took a chance on them when they needed it. Besides, Silicon Valley Bank will be more than happy to take them off your hands.
Earlier this week, local bloggers/tweeters were invited to Coco’s Cafe, in Mt. Pleasant, for a food tasting event. This was all setup by Lyn Mettler of Step Ahead Web Strategies. I’d never heard of Coco’s and had never eaten at a French restaurant. I must say, the food was great, especially the desserts. Normally, I feel chocolate and mint are a bad combination, but Coco’s has definitely changed my opinion in that regard.
By inviting local bloggers, I’m sure Lyn hoped that we would blog about our experience. From what I saw that evening, I’m sure most did. There were a couple of people that even posted pictures on www.brightkite.com.
This get-together made me think about how banks could do something similar. Commercial customers are more profitable, on average. Arranging bank sponsored get-togethers would be beneficial to both the bank and their customers. Normally, bank customers are invited to events that showcase the bank’s products. Events that showcase the customers would be a welcome change.
Commercial customers offer a diverse line of products and services. Getting a group of them together would be a win for them and the bank. With the economy in the dumps, any way that could help drive new business to commercial customers would be greatly appreciated.
Imagine it, the bank invites restaurants and caterers so that they can provide and showcase their food. Other companies could give five minute presentations about what they offer. Afterwards, more networking could be done. The bank would be seen as a partner, not just a money lender. In this economic crunch, banks need to do everything they can to get more customers on their side. This would definitely be a step in the right direction.
Like other financial institutions, we are also involved in community service. One charity that our employees participate in is the American Cancer Society’s “Relay For Life“. This is a special charity to me because my mother was a cancer survivor. I had the pleasure of serving as our team’s captain two years ago and co-captain last year. Unfortunately, I had to relinquish my captain duties this year but I am an active participant on the team.
Over the past few years, First Federal has been successful with raising the most team donations. It looks like we may have that honor again this year. Other teams have asked how we were so successful, especially since we do a majority of our fundraising in just four months. Along with the standard luminaria and track signs, we also have bake sales, hotdog sales, and a car wash. Our largest fundraising event is our silent auction.
For our auction, we call around to local businesses and get donations. Some things we have offered are lunch baskets (gift certificates from local restaurants), spa sessions, golf packages and other baskets that departments and branches put together. What really makes it exciting is we made it into an online auction, a la eBay.
The idea started a couple of years ago when someone suggested that we have a silent auction as a fundraiser. After we all agreed to have it, I suggested that instead of the normal silent auction, we run it through our intranet. I figured that if we “eBay” it, that would drive up the excitement and the bids. As it turns out, it was hilarious watching the bids go up and people trying to time that last bid at the final second before the auction closed.
This was the third year that we had our auction and we were able to raise just over $5000. So, if you happen to have a web developer or two on staff, an online auction could be useful. Also, this lets all of your staff participate. It’s very easy to sign-on to the intranet and bid instead of being limited to just the corporate staff.
If you’d like to contribute to our Relay For Life team, you can donate here, on my participant page. Thanks and good luck with your fundraising events.
Image provided by American Cancer Society
The other day, a co-worker and I were discussing our opinions on the shifting focus onto sales in the banking industry. We both felt that the industry seems to care less and less about servicing the customer. My co-worker, who is a trainer for branch staff, gave me an example from one of her training sessions.
A trainee was lamenting about how annuities sucked. She said they were very difficult to sell because very few customers had that much in an account. The chances of a customer having $10,000 available to open one were miniscule.
My trainer friend asked her what was the first car she got at 16. The trainee looked confused, but answered with something like a late model Honda Civic. My friend then said, asking your typical customer to open an annuity is like you being able to go out and buy a BMW 700 series at age 16.
She went on to say that you can’t expect a DDA customer to pull $10,000 out of thin air. You have to take the time to build a financial relationship with your customers. You always hear that you have to sell sticky products to your customers. Typically, this is direct deposit, online banking, bill pay and e-statements.
After listening to my friend, I no longer feel that these are sticky products. If all you have is a DDA relationship, the customer could easily go across the street to a competitor. Believe me; it’s really not that hard to change your direct deposit and online banking information. If your new bank uses the same bill payer as your current bank, they may even be able to transfer your information over.
My friend told me that her old branch is reaping the rewards from her work years ago. When she sat down with a new customer, she opened the checking account and setup the other “sticky” services. Also, she would talk to them about opening a savings account, even if they didn’t have the minimum amount.
She explained that yes, they would get a $4 monthly fee, but she’d set it up so that each pay period, $25-$100 (whatever the customer was comfortable with) would be deposited into their account. This way, after a couple of months, they would have the minimum balance and begin building an emergency fund.
After 6 months to a year, she would sit down with them again and suggest moving some of the money to a CD so that they could get a better rate. They would still have some money for emergencies, but also be building more wealth. Within a couple of years, she’d refer them to our investment group. During all this, she’d be building a personal relationship with all her customers, plus getting more referrals as they told their friends.
After our conversation, it hit me that a savings account is the stickiest product that we have. It’s also the foundation for building a relationship with our customers. It all starts with servicing the customer and having their best financial interest in mind. As my friend said, it’s a lot easier to sell that $10,000 annuity when you service the customer and help them save that amount to being with.