The Mechanics Bank of Northern California doesn't merely have a David-versus-Goliath story to tell. This independent community bank with $2.3 billion in assets is competing for customers against a half dozen giants-financial institutions with up to a trillion dollars in assets.
The sheer size of Mechanics Bank's competitors in the San Francisco Bay area is daunting. Bank of America has $44 billion in deposits in that market and 158 branches, according to FDIC data. The second largest competitor in the market, Wells Fargo, has $26 billion in deposits and 144 offices. The third, Citibank West, has $15 billion in deposits and 85 branches.
The top five banks in the San Francisco-Oakland-Fremont footprint combined control more than 70 percent of the deposit market, according to FDIC data. Mechanics Bank is the No. 12 largest bank in the market with 23 branches (it has 32 total in California) and $1.8 billion in deposits. Scott Carmel, the West Coast banking analyst for Moors & Cabot, sums up the quandary for Mechanics Bank. "These bigger banks tend to take more of the customers," Carmel says.
But Mechanics Bank, founded in 1905, has a rock in its sling: customer service. "Our customers are able to get a hold of their branch without going through voice mail," boasts Tony Chavez, Mechanics CIO and svp.
Mechanics Bank's focus on personal service may not topple the banking giants it's up against, but it has helped the bank grow steadily. Mechanics, based in Richmond, CA, has expanded over the past 15 years beyond its roots in Contra Costa County into the Napa Valley, Sacramento and San Francisco. As it enters its second century, Mech-anics is now utilizing a technology tool that the bigger banks have been taking advantage of for years-customer relationship management software.
Earlier this year, Mechanics Bank bought a new customer account management package from Information Technology, Inc., a Lincoln, NE-based financial technology provider. ITI's Next Generation Premier is a suite of account management and customer relationship management tools that will allow Mechanics to better deliver products and services that respond to-and even anticipate-the needs of its customers.
The package, which cost Mechanics less than $100,000, helped the bank integrate a variety of data streams so that all customer accounts, trusts, credit card information, etc., can be accessed in a Web-based display from any work station. In addition, Mechanics may be able to use data about customer and service profitability to boost revenue by better targeting offerings.
Mechanics Bank has felt pressure to provide customers with the conveniences they would expect from a larger bank; it has developed Internet banking, debit cards and other cash management products. "In order for a bank like Mechanics to compete, they have to be able to offer brokerage, insurance, credit cards and all of these other types of services that continue to be part of that 360-degree customer view," says Jim Sizemore, ITI's svp.
As it has grown in size, Mechanics Bank has sometimes maintained several different accounts for the same business or customer, instead of one main account that included all the products and services the bank was providing, Chavez said. Now, account managers and customers will have access to all customer data under one account.
Community banks such as Mechanics are realizing they need the technology in order to compete. "They may have thought, 'We already know our customer,'" said Kim Collins, research director at Gartner. "But the ones that they see every week may not be the ones who are the most profit-able. They're starting to realize that the customers they thought they knew, they don't."
One new feature Mechanics Bank will be able to provide customers and employees through the ITI package is Premiere Messenger, an events manager. "If I'm a customer and I have Web banking, I may want an e-mail when a certain check comes through written by a certain customer," Chavez says. "Or I may want to know when my CD will mature 30 days before it does." Account managers can use this feature to be notified of certain events in a customer account-from late payments to taking out a new loan.
In order to implement these new technologies to help the bank grow its business and provide better customer service, Mechanics Bank decided to outsource other IT functions. In November, Mechanics announced that it has selected the Farm9 Security Compliance Package to provide round-the-clock security monitoring, analysis and auditing and a wide range of compliance services to help Mechanics meet and exceed regulatory mandates from the FFIEC, Gramm-Leach-Bliley Act, the state of California and the FDIC. "It's very effective for the bank, but it's not necessarily something you want to have in-house," says Chavez, who has a 38-person IT department out of a total bank staff of 600. His staff can now turn its attentions to doing battle with the banking giants.
