Remember the good ol´ days of lemonade and big front porches? And grandpa with his candies? And-wait; let´s try that again. Remember when the drive-thru bank tellers at your local branch recognized you and sent lollipops for your kids through the pneumatic tube?
The biggest American banks these days may be enshrined in the comfortable status of "too big to fail," but they´re missing out on an important, cost-free publicity jaunt. Smaller banks, many of which can claim to have maintained stability throughout the financial crisis, are reaping the benefits of a recession-fueled nostalgia for simple gifts. Like credit cards with no fees and no interest rate hikes.
John King, the president and chief executive of the $110 million asset Three Rivers Bank in Kalispell, Mont., said he hasn´t had to pay for much advertising, but his bank has grown 10% this year. He believes the growth has come from customers´ search for transparency.
"I see more and more businesspeople and depositors coming in and asking how the bank is doing and we don´t give them a bunch of numbers. We just tell them how we´re doing," King said.
He added that while he hadn´t launched any new ad campaigns, he had written a letter to the bank´s customers inviting them to stop by and ask questions. "One out of 10 will show up and ask questions," he said.
King has also distributed all 1,000 copies of Three Rivers´ printed statement of condition. Typically, a run of thousand copies lasts a whole year, he explained. This year, realized he needed an extra thousand.
Community bankers and regulators may have legitimate complaints about the Obama administration´s failure to solve the "too-big-to-fail" problem: The new regulatory restructuring proposal could actually draw big banks deeper into their own category, with material consequences, including cheaper funding costs and separate leverage restrictions. Small-time bankers have been complaining since the start of the financial crisis that big banks have gotten more help from the government for less effort. But those smaller bankers are benefiting from the negative media coverage of the public´s abrupt abandonment of Wall Street worship, as well as the rosy stories of community banking, such as this New York Times piece on community banks in Indiana, and an op-ed today in the Times touting credit unions´ uncomplicated credit card offerings.
King said his bank, too, offers cards without fees or harsh penalties. Three Rivers charges a 14.88% interest rate on all cards and does not raise rates after late payments. The bank started offering credit cards 23 years ago.
"It´s been profitable since day one," King said.
King said he didn´t believe his bank turned down an inordinate number of credit card applicants, either. "We definitely use the five "C"s of credit in looking at a credit card decision because it´s unsecured," he explained. "You take somebody who´s banked here a long time, never been in the overdrafts and they´ve never had a credit card and they apply for one for say $1,000, if the have the cash flow to handle that $1,000 limit I´m all over that person because they´ve demonstrated over the years that they can be responsible."
Descriptions of prudence; old-fashioned common sense: They´ve been transformed into low-cost, cutting-edge marketing tools.