Arizona has become a new hotbed of banking, and one startup is making a name for itself with one-of-a-kind customer service. While most community banks tout their personalized service as a refreshing change from that of the big banks, Scottsdale-based Goldwater Bank has adopted the strategy to such a level that other industry players wonder whether it's straying from the very essence of what a bank should do.
Bank president Larry Sheffield sounds like any one of thousands of community bankers when he talks about the "five Cs" that underlie Goldwater's business plan, including customization, courtesy and common sense. But it's the other two C's that make competitors' eyes widen: free courier and concierge services for its most important customers. Clients qualifying for those last two "C's" must maintain $25,000 on deposit.
The services, which Sheffield views as customer-retention tools and not profit generators, include white-glove activities like arranging for tickets and reservations at restaurants, hotels and airlines. It also includes a personal shopping service and a transportation service. The bank has established working relationships with local companies, like limousine services and florists, to handle these requests. Though the bank makes preliminary arrangements, the service firms bill customers directly.
Some of the bank-oriented services include delivering withdrawals, and picking up and making deposits, from either individuals or business customers — within an hour. And of course, the bank also offers the current must-haves for trendy high-end banks: a wireless lobby, original art from locally-based artist Bella Ostrovsky, private transaction pods, a lounge area with leather sofas, and flat-screen TVs to monitor the markets.
Sheffield is aiming at Scottsdale's affluent community for his main customer base. Goldwater won't turn anyone away, Sheffield says, but it especially wants the successful "entrepreneurs, rainmakers and developers," he says. Maricopa County ranks No. 4 among U.S. counties in the number of resident millionaires, according to a survey by TNS Financial Services, a market-research company. The county, which includes Scottsdale, was the fastest-growing in the U.S. in 2006; previously, that designation was held by Las Vegas. Even closer to home, Sheffield notes that there is $3 billion in construction happening within five blocks of the bank.
"For a business owner, time is so important," he says, noting that customers aren't liable if their cash deposit is stolen before it hits the bank. "They don't want to go to the bank in the middle of the day. If a restaurant needs cash for the day, we'll bring it to them." Or a customer may be too busy to go to the bank the day before a vacation, so the bank will come to him. Deliveries are made in an inconspicuous car, he says.
Goldwater Bank opened its doors in April with $22 million in investor capital, with plans to hit $100 million in assets within its first 12 months of operation, Sheffield says. The bank needs to hit the $80 million-asset mark to break even, and boasted $41 million by mid-August. Goldwater has created the most buzz of any of the 13 startups in the state in 2006 and 2007, says Tanya Wheeless, president and CEO of Arizona Bankers Association, who notes that Arizona ranks nearly dead-last — or 49th — among states in the number of bank branches per capita. So there is plenty of room for more institutions to call Arizona home, she says.
Bob Calvert, president of Calvert Consulting, worries Goldwater's extra services could become a distraction if it does not remain focused on the core business of banking, though he acknowledges the idea is unique. "It's like a guy who owns an ice-cream stand and decides to start selling car parts," he says.
He offers a couple of specific suggestions for Goldwater: If its clientele is dominated by travelers, the bank might help clients finance trips and not just arrange for the tickets. The bank could also reduce the threshold to as $10,000, since many small-business owners can afford to have $25,000 tied up in a bank account.
Sheffield disagrees with the criticism of his business model. As a former real-estate developer, he says he understands the banking needs of business owners, professional and personal. And he says a high level of service is just what's needed to make a mark in community banking, especially in a growing and affluent market. Calvert, while dubious, says he hopes Goldwater's model works. "I wish them luck," he says.
(c) 2007
