Few consumers have been able to escape the industry's wave of mergers; it is very likely that a customer's current bank has a different name than it did when that person opened the account.

Though some mergers have been carried out seamlessly, with high levels of customer satisfaction, others have given the press, politicians, and the public the ammunition to assail them with.

As the number of banking choices dwindles, a frequently voiced concern is whether community banks will continue to exist. Will they go the way of the corner grocery or hardware store? I believe the answer is a resounding "no" - there will always be a place for a well-run community bank.

Though this last decade has brought fundamental changes to the financial services industry, every bank has had both the opportunity and the obligation to analyze what it is and what it wants to become, regardless of size. And though banks' traditional and core businesses have been challenged on many fronts, the driving force behind this change has been customers and their demands for products, service, return, and convenience.

Banks of all sizes have therefore had to reshape the way they do business. If they were unable or unwilling to do so, an exit strategy has been forced upon them.

Community banks can survive and prosper in this financial services environment by putting a high priority on preparing for the future. They will need to identify and take advantage of their strengths: customer service, customer and market knowledge, nimble decision-making, customer responsiveness, organizational communication, and deployment of technology.

Most community bank leaders believe that consolidation has created opportunities. Community banks can take advantage of these opportunities if they remain focused on the fact that as the industry changes they must evolve with it or ahead of it - never losing sight of the precepts that have underlain their successes.


A customer's business must be earned every day. Each client contact must be viewed as an opportunity to solidify the bank's patronage. This requires offering products that have competitive pricing and returns; which are delivered when, where, and how the customer demands; and that are always backed by efficient, personalized service, regardless of the delivery medium.


A major advantage of true community banks is the close relationship they enjoy with the areas they serve. They must never underestimate the importance of the health and prosperity of their areas to their own success and growth. A community bank should always recognize the need for its actions to be seen as having contributed to their home area.


A qualified, committed, and enthusiastic employee team is crucial to any business. Even the most creative and carefully considered strategies depend on the people who carry them out - those on the front lines and in the back offices. The work environment and rewards system in a community bank must be formed with the same commitment to quality and satisfaction as every other ingredient in the success formula.

Community banks cannot be everything to everyone. They need to remember to do what they do well - and better than those with which they compete. They should not be afraid to let others do the things they do not believe they can do well.

The banking industry will continue to change. But if community banks are able to achieve in these fundamental areas of customer care, community commitment, and employee confidence, they will have room to create, innovate, and prosper.

Mr. Outhouse is president and CEO of First & Ocean National Bank, a community bank since 1812 in Newburyport, Mass.

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