As more community banks head online, some may be wondering why. Isn’t the advantage of a small bank the personal service it can offer customers? For example, our president knows just about every business customer personally; sees them at Rotary Club; has kids in the same soccer league. Conventional wisdom says you can’t make money on the Web, so why would a community bank spend its valuable resources on that sort of endeavor?

Reason 1: Differentiation

Cascade Bank (Everett, WA; $444 million) had been a traditional thrift institution with expertise in originating home loans and gathering high-cost deposits. Then the bank decided to change its orientation, along with many similar institutions, and become a full-service community bank. A major step towards that redirection was to purchase another local bank that catered exclusively to business customers. Cascade now had the expertise and the resources to answer the needs of most small businesses with annual revenues less than $5 million. But in a market where several community banks were already touting the “locally owned” label to capture the disgruntled business clients of larger banks, what could differentiate Cascade?

We decided one answer was Internet banking specifically designed for business customers. They’re the ones that really have their hands full running their business. They need to make every minute count and already use PCs. They want financial control. Most importantly, when we asked them, 30% of our customers said they would use online banking.

Reason 2: Innovation

New technology is dropping in cost and becoming easier to install. We knew we needed to be first in the market to gain attention, so we went with a turnkey solution from Q-UP Systems. For our business customers, being able to view transaction data at their convenience is a big innovation. And the other functions in Q-UP’s Cash Manager help our clients run their businesses more efficiently:
managing cash, paying bills, paying employees, and paying taxes.

 

 

Reason 3: Extending Delivery

With 11 branches spread throughout the Puget Sound region, Cascade Bank can’t match the branch-based convenience offered by Bank of America or Wells Fargo. So we want to do everything we can to help our business clients do their jobs without coming to a branch. It’s the opposite approach from the large bank strategy of lowering costs by servicing small businesses via the Web. We’re trying to get in touch with them more often and more conveniently.

This philosophy extends well beyond Internet banking. Our business bankers make a point of visiting their customers in person at least three times a year. We also offer a deposit courier service with flexible scheduling to pick up customer deposits.

Reason 4: Tool for Business Bankers

We’re training our business bankers to understand online banking inside and out, to be able to troubleshoot problems. Customers will be encouraged to call their banker with questions, not an anonymous central service line. We’re also planning seminars where we’ll show customers how to maximize their use of our service.

The more access and control of account information we give our customers, the better able we are to help them with the really important part of their financial picture. The less time a Cascade business banker spends transferring funds between checking and savings, the more he or she can spend helping customers fine-tune their financial picture. It gives business bankers the chance to talk to their customers about employee retirement programs, financing their building, or buying another widget-maker. That’s where we’ll make money from online banking.

Would we lose business if we didn’t implement online banking for a few years? Probably not. Will we win more business by offering this? Yes, but only in tandem with the personalized service we already offer business owners. But, there is no doubt that it does give us something to talk about at the next Rotary meeting.