Webster Financial Corp. Chairman and Chief Executive Officer James C. Smith has no regrets about eliminating free checking for customers.
Though the Waterbury, Conn., company lost a number of retail and business customers when it got rid of free checking last year, most held low balances and did not using the bank's other products and services.
Yet despite the loss of customers, transaction account balances at Webster have increased by 12.5% since June 30, 2010, to $4.8 billion, and balances in business accounts are up by about 30%, Smith said at an investor conference in New York Tuesday.
Webster's decision to eliminate free checking is part of a broader initiative to focus on what Smith calls "higher-value clients."
In the last year, the $17 billion-asset company has beefed up its commercial loan portfolio by hiring a new head of business banking and 11 commercial lenders and it is aiming to grow its wealth-management unit by roughly doubling its number of private bankers over the next couple of years.
Meanwhile, Webster is aiming to reduce its efficiency ratio from 65% to below 60% through a combination of revenue-raising and cost-cutting initiatives.
In recent months, the company has closed 11 branches and it plans to continue scaling back over the next few years with a goal of having "fewer, smaller branches in better locations," Smith said at the Barclays Global Financial Services Conference. Webster recently built a 550-square-foot branch at a commuter station in Scarsdale, N.Y., that Smith said could be a prototype for future branches.
The company is also encouraging in new technologies — including image automated teller machines and mobile-remote capture — that Smith said would promote convenience and reduce the need for branch visits.
"It's not about cost-cutting, it's about allocating resources so that we are investing in strategies that maximize profits," Smith said.
