What must a bank do to get new business?

These days some are using high interest rates on Internet-only accounts. As their ads say, with no offices or people serve the customer in person, the bank can cut costs and pay higher interest rates. Many are attracted to this feature.

But a vast number of Americans prefer to have an office with humans to see and talk to. For them, the biggest attraction is convenience and this means branches close to home.

We know how difficult it is to get people to switch from one bank to another. They establish banking relationships, automatic debit and credit programs, and habits that they change only in dire circumstances. You have to insult a customer a long time and with deep intensity before he or she leaves the bank.

So marketing for new accounts must largely depend on trying to woo people coming into town and those past the point of inertia.

Many banks try radio and television advertising. But it is hard to spell out fees, minimum balances, and other important factors in a spoken commercial that passes by rapidly.

Newspaper ads may be the most effective way of telling your story to new people in town and those wanting to change banks. But do banks do a good job of advertising in newspapers?

I chose one day's issue of two papers - a local daily in Summit, N.J., and the bigger Newark Star-Ledger, - and examined every page of both for bank ads. I can honestly say that if I were a new person in town looking for a bank, only one ad would inform me or tempt me to any degree.

Two banks advertised their rates for home equity loans. Four banks advertised CD rates. One thrift had an ad saying that relationships rather than rates are what matter.

Only one, the brand new Allegiance Community Bank of South Orange, spelled out its minimum balance requirement, fee schedule, services available, and check-writing policy. Only Allegiance appeared to me to give the type of information an individual would want and need before opening a new account.

Both papers were loaded with real estate and auto classifieds, and some finance companies chose to advertise their services on those pages. Yet there was not a single bank ad on these pages promoting home or auto loans - a striking omission since banks generally offer more favorable rates on car loans.

Had I moved into Northern New Jersey and been anxious to find a bank, I surely would be disappointed with what I learned from one day's newspapers.

How does your bank woo new depositors? The best response will help our industry and win this the coveted presidency-for-a-day at Schmidlap National Bank.

Mr. Nadler, an American Banker contributing editor, is a professor of finance at Rutgers University Graduate School of Management in Newark, N.J.

Send Us Your Ideas
Mr. Nadler's column is a forum for community bankers to share their concerns, problems and solutions. You can participate by writing to:
Paul S. Nadler
14 Friar Tuck Circle
Summit, NJ 07901

Or you can fax to: 908-273-7309
Responses will be printed in the column.

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