The moment a customer steps away from the centralized table, where deposit slips and other bank transaction documents are kept, they are greeted by a welcoming smile from one of Herring Bank’s tellers.
“I think that customer service is the No. 1 thing that distinguishes larger banks from community banks for consumers,” said Aileen Berrios, market president for Herring Bank in Colorado Springs. “Your customer service, your people that work inside the branch, are the actual people you talk on the phone to here. We are just more accessible to give them that hands-on customer service, so that is a big distinction.”
Local financial institutions are banking on customer service and perks, such as free checking, when it comes to attracting customers from larger banks.
When asked the key to attracting or keeping customers away from larger banks, three area bank representatives from Legacy Bank, Herring Bank and The State Bank all had the same answer — customer service.
“We of course are staying up with all the technology advances just like the larger banks, but we also still feel good customer service is the most important factor to attracting new customers,” said Curt Wyeno, marketing president for Legacy Bank in El Paso County.
A study released March 26 by PricewaterhouseCoopers, a multinational professional services network based in London, found 73 percent of people say customer experience is important when making purchasing selections.
Banks keeping physical locations is essential in maintaining good customer service, said Luke Smith, vice president of The State Bank, in an email interview.
“When it comes to banking, consumers of financial products are demanding more automated functionality but they still want to maintain control by interacting with a live human being when they need it,” he said.
“Brick-and-mortar locations add peace of mind, should a need arise where online banking may not fulfill the human touch needed when seeking advice about saving, borrowing or investing money.”
Berrios also placed emphasis on the ability for customers to be able to walk-in and speak with someone.
“I think it’s on the customer side that people still would like to speak to someone face to face versus trying to get their problems fixed over the phone,” she said. “All of us have had experiences with trying to have a problem corrected over the phone and the frustrations that can go with it — not just in banking but also with other businesses.”
Beyond customer service, smaller banks typically play a larger role in the communities in which they are located, Smith said.
“As a family-owned community bank, we serve the communities we work in,” he said. “Our success is measured by our ability to provide capital and supporting our local economies, not by how many ‘widgets’ we can sell. As community bankers, we take pride in being involved in our communities. We do this by hiring locally, volunteering our time and supporting the financial needs of businesses, farms, municipalities and school districts.”
Community banks also raise capital and deposits locally in order to fund their institutions, Smith said.
“This is primarily done by loaning those same deposits back out to the communities in which they are provided, re-investing in the communities we serve,” he said.
Larger banks typically are able to offer more products for businesses, Berrios said.
“However, when it comes to personal accounts, you are looking at checking, CDs, IRAs, mortgages, car loans, and I think most of your community banks offer those same services that you would see in a large bank,” she said.
While bigger institutions such as Bank of America are phasing out free checking accounts, at least some community banks see it as a chance to target lower-income customers.
“Free checking plays a role by providing consumers a way to handle their finances without worrying about being nickel-and-dimed in order to use their own money,” Smith said.
The complimentary accounts do not have to be free of features either, he said.
“Our free checking accounts include many useful features, such as online banking, mobile deposit, mobile banking, bill pay and rewards, to name a few,” he said. “Some banks offer free checking but may require a certain number of debit card transactions, a minimum balance or direct deposit or a service charge may be imposed. Our free checking accounts are truly free.”
Herring Bank also offers an account free of fees for customers with direct deposit and digital-only statements, Berrios said.
“I think this will give other people access who are in the lower-income arena,” she said.
About 7 percent of Americans don’t have any form of banking access, including a checking account, according to a 2015 Federal Deposit Insurance Corporation study.
Berrios said the bank also has pay cards for those customers who may not qualify for a checking account.
“They don’t have a physical checking account, but they have more security with handling their money because it’s on a card and then they have a PIN number and can use it like a debit card to make purchases in a store or online,” she said. “It’s really a great product, especially for those people who are disadvantaged or can’t qualify for a checking account.”
Additionally, Berrios described the bank’s new consumer matrix it’s using to lure customers who may not qualify for consumer lending at larger institutions.
“We try to be a lot more flexible for those people who don’t have the perfect credit score,” she said. “Someone who has been turned away from a larger bank may have better success with getting the loan they are asking for with us.”
At community banks, it’s not about pushing products for the sake of more sales, Smith said.
“Our customers know when they walk into any one of our locations they are greeted by a member of our staff, including owners of the bank and we know them by name,” he said. “Quite a few customers, whether they are in Falcon, Rocky Ford or La Junta, are multi-generational customers. ”