Consumers wary of the economy and uncertain of the future of the nation are taking the safe road and deciding to save their money. In light of this recent trend, many banks are moving to provide incentives to bring in new customers that are interested in secure savings that will increase their funds.
Currently, the banks that need deposits the most are the national banks that were hit the hardest during the financial crisis. Major national banks are trying to lure in customers to their savings programs through incentives to switch over and better interest rates than most consumers can find with smaller community banks.
SunTrust Bank is trying to lure in would-be savers with their “Solid” campaign, which includes easy products for consumers to start saving, appropriately called “Get Started Savings” that helps consumers to save for anything by goal setting. They offer a bonus of 2%, up to $50 on the first year of the account being open. They also make sure to waive the monthly maintenance fee if the account is linked and money is transferred monthly from a checking account. This program, designed for the first time saver is designed to not only gain a savings customer, but to turn them into a checking customer as well by adding the fee free incentive. This will encourage those that are switching from their bank to open both a checking and savings with SunTrust Bank.
Another major bank trying to gain as many customers as possible is Bank of America. Headquartered in Charlotte, North Carolina, Bank of America is one of the largest national banks that has been suffering since the financial crisis and only recently began to see an increase in their stock price due to a fresh infusion of funds from a variety of sources. In the face of such financial difficulty they need desperately to increase their cash flow by increasing their deposit accounts. They’ve done so by providing saving incentives on their savings and certificate of deposit accounts by offering no maintenance fees, higher interest rates and flexibility like 9 month term CDs with no penalty for early withdraw on accounts with at least a $5,000 deposit.
All of these incentives to save are a great way to help lure in new customers from another bank. Many banks are able to compete with national banks by offering similar incentives to their customers; however, some financial institutions—like community banks—struggle with ways to keep their customers with them. Customers to a community bank are the lifelines of their financial stability. With less people borrowing, they need to rely on their deposit accounts to keep their own finances stable.
One community bank that has been competing with Bank of America and other national banks in North Carolina is The Cornerstone Bank (www.thecornerstonebank.com), a subsidiary of CB Financial Corporation. Located in the city of Wilson with only two branches, it would seem that this community bank would easily lose customers to a national competitor, but their President and CEO Norman Osborn believes that it’s the customer service that keeps their customers returning.
As he points out, most banking products are commoditized, meaning there isn’t much of a difference from one bank to another. Customers will always have the choice of which bank they want to do business with. They tend to look not just for the best price or interest rate, but rather for the bank that has the best fit for their particular needs, whether it be location of branches, hours, fees, online access, or range of products.
If banks had to solely rely on their fees and interest rates, than the customers would go somewhere else, but Cornerstone Bank competes on their service skills and Mr. Osborn’s customers prefer a bank where the employees know their name. They also thrive on customer referrals. As many marketers know, word-of-mouth can be worth more than the best ad campaign in helping to spread publicity for a particular service or product. Keeping customers happy will help to spread the good word about their service and help to grow their bank.
With excellent, personal attention in customer service, they also try to remain fair with their products and are able to offer their customers excellent interest rates on savings and checking products, making it an obvious choice for those customers in the Wilson area that are looking for personalized attention and great rates. However, Cornerstone Bank does not offer very competitive rates on CDs. They choose not to take a loss on a product just to gain more new customers or to keep existing customers. They understand that while customers may go elsewhere to get a better rate on a CD, it’s not such a huge threat to their business. They remain confident that their customers will return to them because they can offer them the service they need. National banks are and have always been a threat to community banks because they want all the business out there, but Cornerstone Bank takes a different view on things. They believe that there can be multiple banks to serve a single market and that there will always be customers that want personalized attention and there are customers that don’t. So, while an incentive program may attract customers that want to get the best interest rate, there will always be those customers that would prefer to look at their community bank as a partnership. It’s easy enough to sell a product with the right rate, but it may not be the best fit for a customer. Cornerstone Bank likes to work with their customers to get them the best fit for their particular needs.
Finding a niche market is the only way that community banks are able to compete with national banks. Offering personalized service or special hours can make all the difference in lives of the customers, which can keep them loyal despite having lower interest rates on products like CDs.
The easiest way to find that niche is to ask their current customers what they want the most out of their bank. Each customer has his or her own particular wants and needs that they are looking for. The trick to getting and keeping customers is to find out what means the most to them and then making sure that the business focuses on that particular thing.
Customers are very worried about their money after so many retirement funds have seen such a decline, so now is the time to return to customer service and to make sure that each and every customer gets the best experience they possibly can. This is the best way for community banks to compete against the national banks.
