The term "interactive" is being bruited around by everyone these days.
Marketeers look to the Internet to not only present their items to the public but to have viewers place their orders electronically, too.
Home banking is our industry's prime interactive venture today, with more and more ads showing the bank customer staying home and banking with his or her PC. Some question, though, whether it is smart to encourage the customer to terminate visits to the bank, for they feel that local bank offices staffed by real people is the industry's greatest weapon in fighting the brokerage firms, mutual funds, and insurance companies with their reliance on 800 numbers.
Be that as it may, we will definitely see more two-way communication between banks and their customers through the Internet.
But where there has been virtually no effort made to develop two-way communication, either on paper or through electronic means, is in bank contact with shareholders.
Now one area where community bankers have it all over their larger brethren is in the opportunity to gain business from their shareholders.
Statement stuffers to accompany dividends can pitch bank services, under the slogan, "Bank where you get the profit back yourself." And community banks can also entice customers to become shareholders through messages in the voucher envelope like, "Put your money where your money is."
In this regard, I remember getting a call from the CEO of a bank in Arkansas in which I owned some stock.
"Sell us back your stock," he pleaded, "we want it in the hands of someone local who will give us business, not in the hands of someone way east in New Jersey."
"No," I replied. "For any bank smart enough to want its shares held locally and willing to make an effort to achieve this goal is a bank I want to invest in."
But how much interactive contact do we have with shareholders?
We send them quarterly and annual letters, stressing earnings when they go up or else starting with statements like, "1994 was a challenging year for your bank, but we cleared the way for future growth," when if we were truthful we would be saying, "What a bummer 1994 was. You should be sorry you own the stock."
We have annual meetings, where a few people show up - more, if we serve lunch. There we show the flag but usually ignore all ideas brought up by dissatisfied shareholders.
Some banks have gone further. One I know even published an ad in the local press, giving the signature of every shareholder, thereby showing who had extreme faith in the bank among local citizens.
And once in a while a bank sends out a survey to determine what stockholders want - whether more dividends, stock splits, or special treatment on fees and services for shareholders.
There have even been requests for shareholders to inform the bank as to which of several charities they want the bank to support.
But that is it.
In a day of interactive relations in everything else, can't there be more ways in which a community bank can communicate with its shareholders and thereby gain the benefits that can accrue from the fact that these are people with enough confidence in the bank to have invested in it?
This, then, is our contest for March.
Let us know how your bank either is interacting with its shareholders or how it plans to do so.
Fax your responses to 908-273-7309, or send them to 14 Friar Tuck Circle, Summit, N.J. 07901. You too may become president for a day of the Schmidlap National Bank, verified by a certificate suitable for framing, to prove you have reached this position; the closest thing to royalty we have in the banking industry today.
Mr. Nadler is a contributing editor of American Banker and professor of finance at the Rutgers University Graduate School of Management.
