Banking Web Wizards Banks diversity their services  to compete for customers enlightened by the Internet By Heidi Russell Rafferty

In the film, “Places in the Heart,” which is set in the Depression era, Sally Field portrays a defenseless widow who needs a little help from her banker. She wants to buy cotton seed to plant a crop and save her farm from ruin. But she has never filled out a check, so she demurely pleads with her banker to show her how. Kiss away those bygone days, as well as bank customers who in innocent ignorance relied on their bankers for the most rudimentary of information, says Stephen Schroth, senior vice president of e-commerce strategy and planning at Wachovia Corp. Today’s technological-savvy customers are armed with their laptops. Not only do they know their own bank’s rates and services, but also that of countless industry competitors. More than 20 percent of all customers who are in the process of opening new financial accounts do their homework online before entering a bank’s front door, Schroth says.

Learn more: Building a bank without branches Banks see profits in Hispanic customers Tips for Choosing the Best Bank Start by using the Internet to research the services and fees offered by several banks to learn which one offers the mix of products that’s right for your business and your budget. Armed with that information, visit several banks to determine: Does the bank attempt to understand your unique needs and interests? Does the bank go the extra mile to ensure you’re on solid financial footing? Does the bank’s claims for free checking or free ATM cards hold up after you’re read all the fine print? Does the size of the matter to you? In other words, what’s more important to your business: a variety of sophisticated banking services or traditional services with personal attention?

This has required banks to change their selling approach, because when customers finally decide to make a trip to their local branch, they usually don’t need help with routine transactions but with complex financial issues.
Knowing this, banks big and small now present consumers with a dizzying collection of services, ranging from online access to 401(k) plans and stock activity, to online mortgage approval, to insurance services, to employee benefits packages for the smallest of businesses. Add such technological advances such as check-less banking (it becomes federal law on Oct. 28), and it’s no wonder that customers, no matter how well-informed, are easily confused, says North Carolina Commissioner of Banks Joseph A. Smith Jr.

“Everyone is getting into everyone else’s business,” Smith says. “I think it’s fair to say that banks are much more like businesses today than they are public utilities. There was a time when everyone thought they had a constitutionally-granted right to financial services that were on terms just like everyone else’s. It’s not true anymore. Banks survey customers and understand consumption habits. If they don’t make a profit, they go out of business. It’s crucial that customers understand that banks do need to make a profit.”


Banking Revolutions

During the past 25 years, banks have been in the midst of a series of “revolutions,” Smith says. One has been the process of deregulation, which culminated in 1999. The distinction blurred between the roles of banks and thrifts, mutual fund companies and securities firms. “There was a time when an S&L was the only place you could get a home loan. There was a time, when I first got a loan in Connecticut in 1978, that there were only one or two places I could go. Now that’s totally blown to bits,” Smith says.

In addition to deregulation, technology changed the banking landscape. “A PC that you carry around is at least as powerful in memory or speed as the mainframe that used to run a small bank,” Smith notes. Consumers became more and more knowledgeable about their banking choices, leading to the current competitive frenzy.

Take, for example, the tech products offered by industry giant Bank of America. The bank is constantly evolving in its offerings of products and offerings, and the pace of change is accelerating, says Keith Cockrell, Bank of America Atlantic South consumer executive. He is based in Charlotte.

The bank has 11.2 million active online users, making it the largest online banking customer base in the world, Cockrell says. Couple that with more than 4.5 million online bill payees (who pay more than $21 billion worth of bills each quarter), and one can see how the Internet has become a prevalent channel for the bank, Cockrell adds.

For the past year, Bank of America customers have been able to pre-qualify for mortgages online, using 80 percent less paperwork than in the past. Applications are approved within minutes, Cockrell says. For small businesses, online bill paying services have been well-received, as well as the online ability to transfer funds to ensure quick payment for needed business supplies.

 Wachovia’s Schroth notes that online services actually help his bank to strengthen customer retention and loyalty, because customers have greater control of their routine day-to-day finances. In turn, they engage bankers in a higher level of managing their finances. The average Wachovia customer uses online banking seven to nine times per month, he says.

Becky DeGeorge, Wachovia’s regional marketing manager for the Carolinas and Georgia, notes that the bank constantly trains employees to educate consumers about the convenience of online banking so that they can use branch time for more meaningful financial discussions.

The next technological advance is check-less banking. Under the federal law, known as “Check 21,” banks will no longer have to physically send original checks or deposit slips around the country. Instead, instant images of the checks will become legal documentation. One of the biggest changes for customers will be that they can no longer float checks in the mail while they wait for funds to come into their accounts. (See the Executive Voices column by RBC Centura executive Kel Landis in the July issue for background on Check 21).

First Citizens Bank is educating its customers about what to expect, says Douglas Berlon, group vice president and manager of marketing and communications. “We’re being honest with customers. Overdraft income can play a part in (First Citizens’) balance sheet, but we don’t want people to go through that. Maybe they’ll understand that once their check is gone, it’s gone,” Berlon says.

On the positive side, for a couple of years First Citizens has been offering customers check images through its online banking program, says Jeff Ward, executive vice president and retail segment manager. “With the old way, you get your checks through your statement. Now if the check goes through last night, you can pull up the front and back of it online and see what happened 20 days before your statement shows up,” Ward says.


Leveling the Playing Field

With all of the technological advances so readily available to bankers and consumers today, bank managers agree that they now are on a level playing field when it comes to offering bells and whistles. Charles Snipes, president and CEO of Bank of Granite, which has offices in Granite Falls, Hickory and Charlottes, notes that the only difference between bank services “is the way those services are delivered.”

“I have often told people that if everyone who comes into our bank feels better when they leave, then we will never have to worry. They will send us more business, and I believe that,” Snipes says.

Because customers are fraught with many of the same choices, they should evaluate where to take their business based on their individual income and service needs, he and other bankers say.

Berlon of First Citizens says it might take a while to find the right fit for you. “The best advice, clearly, is to shop around. The truth is, you’ve got to take time and understand what you want out of your financial planning and talk to a few people to get to someone you trust,” he says. “For example, if all you want is a money market account, then we’re not the perfect bank for you. We’re not just transactional-based. We want to commit you to sit down to achieve your financial results.”

Here are some pointers on narrowing your choices between banks and the myriad of products and services:

Does the bank try to understand your needs and interests? Your financial considerations are constantly in flux throughout your life. A young married couple may need a loan to buy a larger home, or they might require financial advice for college funds for their newborn. A mid-career job changer needs help rolling over his 401(k). A retired couple wants to ensure their nest egg stays secure.

Wachovia provides its customers with a “financial checkup” once every six months, in which they discuss in detail such issues as their daily finance management, current loans and stock investments.

Bank of America associates get first-hand experience with home ownership so that they can better relate the nuances of the sale to first-time home-buyer clients. Through the Home Ownership Associate Program, employees receive a waiver to all lender fees if they have worked for the bank for just three months. Says Cockrell, “If you experience it, you’re better able to provide advice.”

Lee Youngblood is Triangle region president at BB&T Corp. He says that BB&T encourages prospective customers to meet with “relationship managers,” who can help determine their current financial situation, understand their financial needs and goals and make recommendations that will help the customer achieve financial security and economic success.

Some banks even take your work hours into consideration by offering a more flexible banking schedule. The Peoples Bank of Newton and Carolina Bank of Greensboro each offer same-day credit, allowing customers to make bank deposits after 2 p.m., a standard cut-off time for deposits in most banks. Carolina’s CEO, Robert Braswell, says deposits are, “the same value to us as they are to you. That has resonated well with our client base.”

Does the bank take extra effort to ensure you are on solid financial footing? Margaret Rudd Bishop and Sissy Rhyne, who in 1981 jointly opened Margaret Rudd & Associates Inc. Realtors in Southport, have relied on BB&T throughout the years for everything from general checking to business lines of credit. But it wasn’t until 1999, when three hurricanes ripped through their properties on Oak Island, that they learned not to underestimate the relationship they had with their banker, Randy Huggins.

The pair has a rental management business that handles about 500 properties. They had to refund deposits to people whose vacation plans were canceled, which threatened their business. “We had a long-term relationship with the bank and looked at where we were with income versus expenses,” Bishop says.

Huggins helped Bishop and Rhyne secure a line of credit and also set it up so that if they needed more money, they could get a second loan, too. “We were able to cut expenses to the bone and never had to go back to the second loan,” Bishop says. Adds Rhyne, “(Huggins) helped us get on track, and that was part of why we are who we are now. That’s why we are so hung up on BB&T.”

BB&T’s Youngblood says that employees try to learn about their customers’ financial situations to be of help in times of need. In the commercial market, BB&T focuses heavily on small- and mid-sized businesses, which typically are locally owned. “Research shows time and again that service quality and how problems are resolved are two key things that customers evaluate. They want a local person who knows their situation and can effectively help them. These are strengths at BB&T,” Youngblood says.

At First Citizens, the slogan is “Do Something Amazing.” Berlon says the bank adopted the concept a few years ago to help the customers reach their goals. For example, a client who is getting older and has no family members to take over her business could get help with the bank’s Business Valuation Program. “We help them evaluate their business, get a price for it and give them the opportunity to sell it and go into retirement,” Berlon says.

Sometimes the way in which a bank handles your most basic of requests signifies its attitude toward your larger financial concerns, says Snipes of Bank of Granite. One of his customers had counseled someone who had narrowed his banking decision to Bank of Granite and one other competitor. The Bank of Granite customer advised his friend to walk into the lobby of each bank and ask a teller for change for a $20 bill — and to make his decision based on how he was treated. “Fortunately, when he requested change, our teller treated him like he was the most important customer in our bank,” Snipes says.

How do the fees stack up? If ever there was a case to be made for “reading the fine print,” it would be for those bank notices in your mailbox about “free checking” accounts and low rates for other services, says Carolina Bank’s Braswell. Although the banking industry is required to disclose fees and services, “that disclosure is not readily apparent,” Braswell says.

“Banks are always mailing out things to consumers, and a lot of it, you don’t want to look at. It gets tossed, you don’t realize a service change or you just don’t want to read the fine print. So things get changed, and they’re not aware,” he says. For example, you might receive a notice for free checking, but a small asterisk would lead you to a footnote explaining that you must maintain a $2,500 balance.

“The truth is in the details. I think a lot of times, people look at the surface and don’t drill down a notch or two,” Braswell says. Although his bank does not offer free checking, it does provide free Internet Bill Pay.


Does Size Really Matter?

Then again, some banks — like Peoples and Asheville Savings Bank — actually do offer free checking. Steve Young, executive vice president at ASB, says that since the bank started offering free checking in 1999, retail checking balances grew by more than 40 percent, and money market accounts grew by more than 130 percent. “We took a leap there. Everyone was saying, ‘You can’t offer it,’ and we said no. We were glad to get the deposits in,” Young says.

Carolina also absorbs foreign ATM costs for their customers. “Say our customer wants to go to Disney and use an ATM in Florida where there is no Carolina Bank. The ATM says, do you want to pay the fee? The customer says yes, and when it clears our bank, we absorb the fee. They have access to every ATM in the United States and can use our ATM or debit card in all but a handful of countries across the world at no cost,” Braswell says.

Does size really matter to you? Depending on your line of business, it might. For example, say you’re a sales representative for a large pharmaceutical company who works out of your home and travels frequently to large geographic areas. You probably want to bank online and have easy access to your bank’s ATMs, regardless of the location. Additionally, you might transfer to another city. The answer: a nationwide bank with branches in numerous states.

But if you’re a small business owner with strong community roots, you’re probably more interested in personal relationships and one-on-one service. Community banks such as Bank of Granite, Carolina, Peoples and Asheville contend that you probably will get more individualized attention from banks like them.

Snipes is in his 47th year at Bank of Granite, and he notes that the bank doesn’t transfer its managers. “If they do well, they stay year after year and are promoted and receive salary increases. The consumer doesn’t like a lot of turnover,” Snipes says.

Carolina Bank launched in 1996 in response to the bank mergers taking place in Greensboro, Braswell says. “When you have all the decisions made in other communities and other states about what can potentially go on in your market, you have no voice. That’s why our community supported us in buying our stock,” he says, noting that the bank recently posted a 25th consecutive quarterly profit. He credits the quality of customer service with that success.

“In our business, the only thing today to differentiate you from your competitor is price or service. We offer much the same platform, but at the end of the day, service wins,” Braswell says.

ASB is a mutual bank and is not stockholder-owned. Fewer than 5 percent of community banks are mutuals, Young says. Because mutual banks do not require stockholder approval for product investment, such as Internet bill pay, they are able to move more quickly on new product offerings, he says. They absorb the expense until the program is up and running and paying for itself.

Conversely, larger banks say they are capable of offering the same type of customer care as their smaller counterparts. It’s up to the customers to shop around and find the right fit for them, they say.

Bank of America’s Cockrell notes, “I’m sure there are some customers with initial concerns about our size. But with our size, we are enabled to provide the level of investment and convenience for consumers. It makes us special in terms of our products and services. It’s a people business. ”

BB&T’s Youngblood says his bank has $97 billion in resources and can handle most any commercial or personal financial need. “Interestingly, BB&T’s operating philosophy allows it to look and act like a community bank. Its 11-state network is divided into regions, each with its own president. Decisions are made closer to the client, because of its unique regional structure. More than 95 percent of all financial decisions are made locally,” Youngblood says.

At Wachovia, associates wear buttons that say, “I care.” DeGeorge says that recently, a customer came into a branch in Charleston, S.C., to handle an insurance transaction from her daughter’s recent death. The teller at the window was wearing a pin that reminded her of her daughter, and the two spent time talking about the customer’s personal tragedy.

A few days later, the woman received mail from Wachovia. When she opened it, the teller’s pin fell out. A note was enclosed: “We value you, and this is a token of saying, ‘Thank you for your business.’”

DeGeorge says customers can expect similar attention at each Wachovia branch. “We work hard to bring all of the capabilities to them, and that means going above and beyond the call of duty,” she says.



Bradley Thompson Builds a Bank Without Branches

Bradley Thompson and Ben Guion enjoy the face-to-face bank dealings with small-to-medium-sized business owners. So a new bank model designed to meet that market seemed like the perfect niche — both for Thompson and Guion, and for the customers as well.

Thompson and Guion are launching NewDominion Bank in Charlotte, raising a target of $30 million to $40 million by the end of 2004 for their initial capital offering. They hope the bank will be open by late November.

“If successful, that would make it the largest startup in North Carolina history,” Guion says. “We’re raising that amount for several reasons. Because of the opportunities with businesses in Charlotte, we expect growth to be rapid. It also gives us a higher lending limit.”

Thompson, the CEO, and Guion, the COO and CFO, formerly worked at South Trust Corp. for the past 11 years and left in January to start their new venture. NewDominion’s service area will cover Mecklenburg County and the surrounding counties of Iredell, Union, Gaston, Cabarrus and York.

Target customers are manufacturing businesses, professional service organizations, medical practices, law firms and real estate and development companies. Business with high-cash demands — such as traditional retail operations — are not included in the list, because the bank will not be set up to handle large amounts of currency, Guion says.

The bank will not rely on branches but instead will require customers to use online banking heavily. In addition, the bank will provide couriers to pick up deposits from their clients throughout the week. There will be 20 to 25 employees, not including the couriers, Guion says.

“We will have outlying locations, so that if someone wants to go to our office, they can. They will not look like traditional retail operations,” Guion says. Two to three employees will work in the 800 to 1,000 square feet of office space.

Guion says the design of the new bank required “a long time of thought. We looked at business models across the country. This is not unique Ö The commercially-focused model is becoming more popular.”

Services offered are not unique, except that the online banking platform “will be premier,” Guion adds. “It will offer functionalities that are not readily available at every bank site,” he says. NewDominion will outsource its information technology requirements to develop the online products.

Initially, the bank will not be involved in ancillary financial institution products, such as trust, insurance and asset management. “We may get into those in the near future, but we’re not going to begin with brokerage services. We are offering traditional banking,” Guion says. -- Heidi Russell Rafferty



Banks See Profits in Hispanic Customers
The Hispanic population, an emerging nationwide consumer market, is becoming increasingly important to banks in North Carolina. Bank officials are designing new programs and services. And one — the Peoples Bank of Newton — has even launched a branch office that is solely devoted to the language and culture.

Jose Isasi owns The Hispanic Group, a Hispanic marketing communications company in Winston-Salem. Isasi, who came to the United States 40 years ago, says 70 percent of North Carolina Hispanics are new immigrants. Creating an environment that makes them feel welcome is “very appealing to them,” he says.

Research indicates Hispanics are more likely to be without a bank account than any other ethnic group. A 2002 survey showed that only 30 percent held a checking or savings account. More than 60 percent used check cashers for financial services. Just 17 percent had a credit card, and 10 percent had applied for a loan.

In August, Peoples Bank launched Banco de la Gente (“Peoples Bank”) in Charlotte. Peoples followed advice from an Atlanta-based Latino bank, El Banco, to design the bank, says President Tony Wolfe.

“We’ve been aware for several years about the growing of the Latino population and recognized we were not meeting the needs. We started investigating and looking into the possibility that the largest population was in Mecklenburg or Charlotte,” Wolfe says.

The branch has an 11-person all-bilingual staff hailing from Mexico, Peru and Ecuador. Wolfe notes that the services extend far beyond language, however. Cultural differences also are accounted for. The bank plays Latin background music and also provides a play area for children. The bank is open seven days from 10:30 a.m. to 7:30 p.m. because of the non-traditional work schedules of its clients.

Banco de la Gente assists customers with non-traditional banking services like check cashing, free money orders, notary services and prepaid telephone calls. Other services include registering them with the IRS so they can obtain ITIN numbers, which are tax processing numbers for individuals who are ineligible to obtain Social Security numbers. Members also are able to pay utility, cable and other bills.

Immigrants save and they send sizable sums to relatives in Latin America. Other services at Banco de la Gente include money wiring through multiple companies and check cashing for both members and non-members.

Meanwhile, other banks are tailoring similar services. Bank of America offers SafeSend for its clients to transfer money. The money can be transferred over the phone or the web and is immediately available for withdrawal. A checking account product is tied to SafeSend.

Diane Wagner, spokeswoman for Bank of America, notes that census data suggest that 80 percent of the population growth in the bank’s franchise area will be Hispanic, Asian and African-American, with 60 percent coming from the Hispanic segment. Bank of America is offering its Hispanic Banking Centers, which provide an environment and staff that reflects the Hispanic culture.

Isasi says Bank of America has gone after the Hispanic market “with both barrels.” The bank has launched an aggressive advertising campaign in Raleigh, Winston-Salem and Charlotte, Isasi says, adding, “They are not only part of the community but also they are very much involved in doing things to reach this group.”

Likewise, Wachovia is hiring and educating more employees to help Hispanic customers, says Becky DeGeorge, regional marketing manager for the Carolinas and Georgia. The bank has just launched a web site solely for Spanish-speaking people. Customers can apply for accounts in their own language, and if they don’t want to use the online service, they can call an 800 number to speak with someone in Spanish.

“One thing we find is that it really is based on a lot on trust — do they trust you?” DeGeorge says. “That means that we get a lot of referrals from other folks in the Hispanic population with a good experience with us.”

BB&T Corp. has launched a Hispanic banking initiative, says Lee Youngblood, Triangle region president. The bank provides its Hispanic customers a series of free audiocassette tapes that focus on important aspects of living in the United States, such as emergency preparedness, driving, housing and home ownership, healthcare and information.

BB&T also has established more than 50 Hispanic banking centers. Each is a part of an existing branch location, enhanced with a new look and with outreach materials for Hispanic customers. Spanish signs and brochures about BB&T are in the lobby along with the information tapes, and the bank has a waiting area for family members. Bilingual employees also assist the clients. BB&T provides a bilingual help line which can be reached during regular business hours.

In addition, the bank recently introduced EnvioFacil, or EasySend, which allows Hispanics to transfer money back home. Many of BB&T’s employees also volunteer on the boards of local Hispanic chambers of commerce. — Heidi Russell Rafferty