"It looks like the big retail banks are going to inherit the earth, but they will not get it all.."

The Art of Better Retail Banking,
Hugh Croxford
Frank Abramson
Alex Jablonwski
Market Directions'
Bottom Line
 September 2007
Market Directions' Newsletter for Community Bank Professionals focuses on retail banking and servicing customers.  We want to help bankers think like marketers.
Dear Banker: 

We couldn't send out a September banking newsletter without addressing the mortage and credit markets.  Eventhough we specialize in marketing and our goal is to get bankers to think like marketers, we see a market opportunity in the current environment for community banks.  Read on. 
 
Sincerely,
 

Mary Malaszek
Market Directions
This Month--- Product differentiation and staying true to your mission. 
 
In banking, and most established industries, product differentation has become increasingly difficult to achieve.  Banking products, once introduced, are easily copied and offered with little variation.  Thus, customer choice is based not on a superior product offering, but on other things such as location, convenience, service. 
 
Thus differentiation for a Community must be its service. 
 
Providing superior customer service is one of the hardest things to do consistently well.  Community banks are better positioned to deliver on promises of friendly, personalized relevant, service. 
 
And this is what they have done with respect to mortgage lending.  To the right is a partial statment from the Indepednet Community Bankers of America-
 
Community Banks clearly demonstrated that they know who they are, what they do, what business they are in and who will benefit from their service---- a case study in marketing that must be noticed and capatilized. 
Community Banks--- Knowing who you are.  
 

Community banks have strong incentives to ensure that a borrower receives a mortgage loan that is appropriate to their circumstances. Community banks focus on customer relationships; they want their mortgage customer to have a good experience so they will be willing to do more banking business with them. Community banks also want the customer to be able to repay their obligation in a timely manner. The low delinquency and foreclosure rates on mortgages made by community banks as compared to the rest of the industry is evidence that they take great care when extending credit.

 
Statement of Ann M Grochala
Independent Community Bankers of America
House of CardsSome 2.4 million howowners are in danger of losing their homes, critics are pointing fingers at who is responsible-- her are some thoughts. 

Borrowers: There's certainly lots of responsibility here, especially for the borrowers who were less than honest about their finances. Others can be blamed for not being more pro-active or diligent about obtaining the right kind of loan.

Real Estate Agentsare not always scrupulous about fulfilling their fiduciary responsibilities to their clients. They sometimes persuade consumers to overspend and take on mortgage payments that may ultimately be unaffordable.

Wall Street:  Perhaps not the direct source of the subprime crisis but an enabler of it.

Lenders made far too many loans to borrowers they knew, or should have known, would not be able to pay them back.

Regulators could probably have acted sooner to stem the worst abuses.

Appraisers More accurate appraisals could have lessened the severity of the problem.

Brokers:  Were mortgage brokers always careful about matching borrowers with affordable mortgages? No way. But lenders made the ultimate underwriting decision.

(From CNN-Money.com)

Bottom Line
 
SEPTEMBER'S BOTTOM LINE
 
Community banks avoided financial distress by staying true to their mission and committments to their customers.  Now, can they capitalize on this, not as finaciers, but as marketers? 
 

JUNE'S BOTTOM LINE
 
Use the summer months to catch up on reading, or better yet to delve into the process of understanding your customers, so that when September comes, you will be ready for anything. 

Knowing what your customers and prospects really think and what they really want is the only way you can design the products, messaging and service protocols that keep customers loyal and comfortable enough to turn over more of their assets to your bank for safekeeping and investment.

 
MAY'S BOTTOM LINE
 
Community Banks must work diligently to find their own unique niche, which could bet be getting customers into branches, better and more on-line services, servicing under-served communities or whatever it is that YOUR customers require and appreciate---- but first, you have to ask. 
 
APRIL'S BOTTOM LINE
 
Community Banks need to be able to navigate through the commodification of the industry by relying on delivering 'real' superior customer service and customer experiences, not just another advertising slogan.  This has to be the most cost effective way for differentiating yourself from the 'big banks' who are attempting to occupy your space.

Forward  Friends and Travel! Get Away
Summer's over but we are still offering weekend getaways.  In an effort to increase our mailing list, Market Directions is offering you a chance to receive three days/two nights accommodations at over 26 destinations.  (Click here to see full brochure & details.)
 
Just forward to three colleagues or friends to receive your travel certificate.  If you want, forward to your entire email list,  the software we use to send you this email will automatically count the number of times you forward. 
Offer Expires: November 1, 2007..... Click here to view prize details.

About Market DirectionsMarket Directions is a full service custom market research firm that helps companies to identify and clarify distinct marketplace opportunities. 

Since 1994, we have enabled organizations, both large and small, to understand their customers everythingin new ways. By asking the right questions and analyzing the answers, our unique, hands-on methodology enables CFOs, as well as senior marketing and sales executives, to significantly increase sales and gain measurable competitive advantage. 
  
We do this by using a variety of market research tools-from individual interviewing to broad-based electronic data gathering-and present our clients with new, exciting, and profitable ways to understand their customers and their environments.
 

Our promise to you? That as a result of our work, you will understand your customers and your business in a whole new way. You will see your products and services as your key customers see them, and, armed with this critical information, that you will save both money and time, delivering your products to new markets of eager, highly-qualified buyers.