Trouble for Some, Opportunity for Others

by bradywalen on April 15, 2009

Last month, the Chicago Tribune ran an article with the headline: MB Financial chief Mitchell Feiger says it’s ‘very possible’ 25-30 Chicago banks could fail.

 

It’s a similar story in markets across the country.  Feiger discusses the national trend in the article:

“Say if 10 percent of banks in the country fail, which I think is a very possible number, and proportionally 10 percent of the banks in Chicago area fail, which I think is a very possible number, then 25 to 30 banks in the Chicago area will fail.”

 Feiger goes on to say “There will be more opportunities like this one”, as MB Financial was the acquiring institution of failed Heritage Community Bank.

 

Every week we hear about the latest banks to join the list of 20+ failed institutions since the beginning of the year.  And while the headline suggests trouble for some, it could present a series of opportunities for others.  

 

The challenge lies in the ability for executives and marketers to recognize and take advantage of local market opportunities.   While economic shifts impact markets differently, we are seeing opportunities for financial institutions to:

 

·             Reconnect with your customers

           How long has it been since you reached out directly to your current customers?  We’ve seen a lot of newspaper advertisements emphasizing safety and soundness, and we’ve seen some institutions post a message from the president on their homepage – but these offer indirect one-way communication.  Instead, write a letter, pick up the phone, or have an in-person conversation; connect with your customers, answer their questions, and work to deepen the customer relationship.

 

·             Deepen customer relationships

Many people hear the phrase ‘deepen the relationship’ and immediately think of cross-selling.  But consumers don’t want to be sold anything right now.  The opportunity here is not necessarily in selling more products, but in moving beyond product and working to create an emotional connection with your customers.  As your competition tries to attract your customers with advertisements and product promotions, you have the advantage of an established relationship – use it to your advantage.

 

·             Reestablish your competitive position

As players change in your markets, you have the opportunity to emphasize the points that make your institution different from the competition.  Tell people about your differences, demonstrate those differences and let them experience it first hand.  Now is the time to help people make the decision to bank with you – or help them decide that you’re institution isn’t right for them.  Either way, you have the opportunity now to differentiate from the competition.

 

·             Take advantage of customer churn

We know the players are changing and consumer uncertainty is high.  You may have the opportunity to take advantage of any customer churn happening in your markets as a result.  While advertisements and promotions may work to generate some awareness about your institution, you’re likely to have better success focusing first on deepening relationships with your current customers and reestablishing your competitive position in your markets.  Give your current customers a reason to talk about your institution.   Help people see the differences between your institution and the competition.  Your ads can support each of these efforts.

 

·             Expand your branch network

As financial institutions find themselves in trouble, opportunities arise for other institutions to expand their branch networks through acquisition of troubled bank branches.  The challenge here is making a decision to acquire based on the potential upside a branch location will offer your institution – and not simply because the opportunity is a good deal.  Think strategically and be proactive.  Define a series of parameters that will allow your team to make confident decisions about branch acquisition should the opportunity arise.

 

While many community banks and credit unions are focused on the immediate challenges brought about by the recent dramatic shifts in the economy, others recognize the opportunities embedded in those challenges to position themselves for long-term sustainable growth. 

 

Now is the time to take advantage of these opportunities.

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