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Why Small Banks Won't Change

Adam Rust's picture

Posted October 2, 2014

Although I love the level of personal service that I get from my small bank, I am frustrated with its reticence to change.

There are three main types of retail banks in the United States: money center, community, and branchless. I like to dabble with all three. I have two checking accounts at a small North Carolina bank, one at Simple, one at GoBank, one at BB&T,
and one at Wells Fargo.

Ah...Wells Fargo. I never meant to work with Wells, but thanks to G. Kennedy Thompson (Four Ways to Pay!), the decision was made for me. 

The Community Bank Experience

I like my community bank.  Witness how it went when I used the drive-through last month: 

"Hi Adam," said the teller. "How have you been? What can we do for you today?"

"Oh," I responded. "I feel good. I just want to deposit a check. Do you have any more deposit slips?"

"Of course. She drops a handful in the tray. The drawer ejects and opens on my side. The slips are under a granite paper weight. "Take your time. I'll be here."

When I'm done, she extends the tray. I ask the question that is always on my mind about this bank.

"Are you guys thinking about getting remote deposit? I sure love remote deposit."

"I'm not sure. I think someone mentioned that. You know we have an app now. You can use it to pay bills. You can even check your balance."

I do have the app. I use it to check my balance.

"Well, let me know if you get remote deposit."

"Well, but then we would miss seeing you." She has a wonderful smile in a grandmotherly sort of way. "That would be too bad. Don't do that, Adam. OK, we'll see you."

I have even gone into the branch

I also like going inside the branch office of my community bank. The lobby is beautiful. There are plush sofas and inlaid wood tables. Sometimes there is a table set up with cookies and coffee. It isn't unusual that the Branch Vice-President comes out to shake my hand. 

Well, actually I should place a caveat on my experience with visiting the branch. When I go inside by myself it is great. But if I go in with a friend at the same time, it trips up the metal detector and we get locked inside the double door foyer that separates the exterior from the inside of the branch. I think it sends the wrong message: we want to be careful about who comes in here. It would be really dodgy if I ended up waiting in there with a stranger, shoulder to shoulder, while the teller worked through a line of customers. But usually there are no customers in line inside the branch and no one waiting to get in outside the branch. The branch feels intimate, like a reclusive shelter from the madding crowds.

Don't Need a Branch, Don't Need a Paper Check

But to be honest, I'd rather skip the whole process of going inside. 

I already feel known in a lot of parts of my life. Banking doesn't have to be one of them. I don't know anyone at Wells Fargo. I am completely OK with that. I use my Wells checking account as my main transaction account, but I bet that I go inside the branch lobby once or twice a year. My wife tends to go more frequently, most often because my son likes to trade in his paper dollars for dollar coins.

Side question: Was Wachovia better? I ignored the banner emblazoned with "Four Ways to Pay" back in 2006. It never seemed like the Wachovia Way to pump subprime mortgage products back in 2006. Wachovia was family friendly. They gave away blue and green lollipops from the drive-through, they paid interest on checking, and they offered free safe deposit boxes to anyone with a business checking account. Nice!  

Those memories are gone. Wells inherited my billpay records, and for better or worse that meant that they got me, too. These days, I am relatively indifferent to the depth of my personal relationships with the tellers.

But - I feel strongly about technology. Wells has that covered. First and foremost, they have a great remote deposit app. They have e-mail pay.

To the extent that I'm taken by these conveniences, I think young people look at them as a baseline standard. My babysitter doesn't want a check. She doesn't have time. She gets antsy at the thought of a check. She literally leans away from me and toward the door when I mention the idea of a check. She says that she prefers to use Venmo. She uses it with all of her friends. As a result, I have made an accommodation. I pay her with WF SurePay. Here's what an early-30s friend who needs to make a series of payments to me said:

"I only have checking accounts at Chase and TD and there are no branches here so I ordered some starter checks from TD....Not sure the last time I've actually written a physical check.  Is there a way to electronically pay?" 

While we are on the subject, I'll briefly mention one more service that young people don't want: the paper statement.

Bottom line: I don't have time to bank with paper.

Community Banks Probably Won't Change

Don't get me wrong. I love the coffee, I like speaking with the Vice-President, and it is so convenient to have a teller that has memorized my account number. My community bank cares about my business.

I would be deluding myself if I pretended that Wells felt the same way. But it is the DNA of Wells (as well as BB&T) to seize on technology. 

But even if I have a friendly visit, I have to change my whole day in order to deposit a check. Today I would have taken the opportunity presented by today's crisp fall air to ride my bike to work this morning. But because I have a relationship with a community bank, I had to use my car.

Is change going to happen? The truth is that change doesn't need to happen for most community banks. The community banks resonate with old people. As I mentioned earlier in this post, they appear to have it on a winning strategy with the cookies and coffee. Next, they should try diet sodas and free vouchers to the local movie theater.  As the wealthiest of the age cohorts, seniors offer a lot of Consumer Lifetime Value. If they want to write paper checks and deposit through the drive-through pneumatic tube shooters, then so be it.