Gary Blossman is a banker who enjoys his independence.
As chief financial officer of $170 million-asset Parish National Bank, based in the New Orleans suburb of Covington, Mr. Blossman has carved a niche serving the low-end business market -- very small independent companies typically ignored by cash management officers at larger banks.
"We try not to be like the bank next door," he explained.
And in the past several years, quite a few large banks have set up shop next door to Parish. Among those Mr. Blossman considers his neighbors and potential competitors are regional and local giants such as First National Bank of Commerce, Hibernia National Bank, Premier Bank, Whitney National Bank, and Hancock Bank.
"Over the past four years, all the major banks have introduced themselves to our market; we've become the fastest growing area in Louisiana," said Mr. Blossman. "To differentiate ourselves, we needed to do things differently."
That's what compelled Mr. Blossman to create the concept of Financial Insight, a souped-up general ledger system that lets the bank provide a full range of bookkeeping and other financial management services to small businesses and high-net-worth households -- services previously unavailable through a bank.
With Financial Insight, Parish customers can review, on one monthly statement, the full range of their monthly financial transactions -- debits and credits, paper and electronic -- to understand the distribution of their income and expenses. They also have the opportunity to receive up to 14 different reports with details and analyses of trends such as distribution of income and expenses, cash flow, and account balances.
The beauty of the service, explained Mr. Blossman, is that it comes from a single source: Parish National Bank.
In the past, he noted, individuals who needed the kind of detail provided by Financial Insight had to look to accountants or to off-the-shelf accounting software packages that required them to key in every transaction and compare the results of that work against their monthly bank statements.
"We were capturing almost all of the data anyway," said Mr. Blossman. All the bank had to do was tweak its procedures and data collection capabilities, he said.
To accomplish that, Mr. Blossman relied on two vendors -- Document Solutions Inc., a Birmingham, Ala., firm that develops and markets image technology systems; and Finser Corp., a San Antonio-based software development company that specializes in the community bank market.
A check imaging system from DSI, installed in 1992, helped Mr. Blossman realize that he could cull together the information necessary to provide customers with detailed financial analyses. Finser then was asked to develop an application package that would allow the bank to pass along those analyses to customers.
"It's a very easy sell," said Mr. Blossman, noting that when the bank began to offer Financial Insight this fall, it signed up 75 customers in the first month. By yearend, Mr. Blossman expects more than 200 Financial Insight customers.
"People will switch banks in a heartbeat to make this happen," said Mr. Blossman.
Why? Because no other bank -- in Louisiana or anywhere else, for that matter -- targets the low-end business market with financial management products.
"Historically, nobody has been able to turn a consistent buck serving small companies," explained Dick Poje, principal, Treasury Strategies Inc., a Chicago cash management consulting firm. Small banks, Mr. Poje suggested, are in a better position to do so, because they can piggyback financial management services on existing investments.
In the case of Parish, the existing investment was its check imaging system, a $400,000 system the bank was already using to provide customers with monthly statements and other services.
"The truly untested market is the $1 million to $5 million business segment and below," said Mr. Poje. "The first bank that reaches that low-end market segment successfully is going to make big money."
As a community bank, Parish is positioned to pursue that market segment. Community banks have a long history of service to small companies, and the technological investments needed to pursue a high-technology service strategy are less onerous than for larger banks.
"Small businesses have been the bread-and-butter customers of community banks for ages," observed Viveca Ware, associate director for bank operations at the Independent Bankers Association of America, Washington. And, increasingly, Ms. Ware added, community bankers are undertaking the retooling necessary to better serve these small businesses.
For many, that translates as investing in image technology. "If you're looking for a total image check solution, you'll find it more often than not at the lower-volume banks. The reason is they can," said Steve Ledford, senior vice president, Global Concepts Inc., a bank technology consulting firm based in Atlanta.
A bank with 40,000 demand deposit accounts, explained Mr. Ledford, can install a full-blown imaging system for $250,000 to $800,000. Larger banks, he said, are restricted to installing one image application at a time, largely because of work volume considerations.
Larger banks, he said, often end up committing millions of dollars to the overall conversion process. "If you can keep it simple, you can accomplish remarkable things with image technology," he said.
At Parish, the remarkable thing has been that the bank has been able to develop and market a service, Financial Insight, that no other bank in its region offers, and to attract new customers and generate new sources of revenue in the process.
About 40% of the customers who sign up for Financial Insight are new to the bank, said Mr. Blossman, and the typical Financial Insight customer maintains and average balance that is two to three times higher than typical bank customers.
Customers who subscribe to Financial Insight pay a $5 monthly maintenance fee, plus 25 cents for each transaction detailed in the 14 different reports offered by the bank. This, said Mr. Blossman, compares with a typical certified public accountant charge of $1 a transaction for keeping tabs on clients' bank accounts and expenditures.
Parish spent between $30,000 and $40,000 on the software and personal computer that runs Financial Insight. The payback, said Mr. Blossman, will occur within less than two years, based solely on fee income calculations. That's without factoring in changes in market share -- changes Mr. Blossman is confident he will realize.
"I have something to offer my competitors can't offer," he reiterated.
"A service like this can clearly move market share," said Joe Petruzella, vice president, Banctec Financial Systems, a Dallas company that markets check and imaging systems. "It may not move tremendous market share, but many banks aren't looking to grow dramatically; they just don't want to lose dramatically."
"What Financial Insight has done is turned Parish National Bank into an aggressive marketing bank," said Randy Clements, the Finser executive vice president who took Mr. Blossman's idea for a financial management system and created Financial Insight.
Mr. Blossman said he is already concocting new products and services that leverage off Financial Insight and the imaging system it uses. Many of these services, he suggested, will take Parish beyond the traditional role of community bank and allow it to add more value to its customer relationships. And that, in turn, he suggested, will help provide the means for Parish to survive and prosper ad an independent bank.
"We're definitely not on the block," said Mr. Blossman when asked if Parish would consider acquisition offers.
"We feel that this product, combined with some other products we'll be bringing to the market and the fact that we'll soon be the only real community
bank in this market, puts us in a pretty good position," he said. "We feel it's way too early to bail out."
At a Glance PARISH NATIONAL BANK
Headquarters Covington, La.
Assets $170 million
Employees 120
Demand deposit 13,000 total
accounts 2,800 business
accounts
