While banks consolidate, their advertisers continue to think small

Few businesses have changed more in the past generation than banking. When I first started writing about banks, 25 years ago in New Hampshire, under state law a bank couldn't build a branch more than 15 miles from its main office. The rules were designed to preserve the small-town, "everybody knows your name" banks and keep out the big, bad impersonal banks from metropolises like Manchester. Over time the barriers to competition disappeared, the industry consolidated, and banks got bigger. You could fill a New England cemetery with all the small-town banks that are no longer with us. The region today is dominated by two big banks, Citizens and Fleet, which is soon to become part of an even bigger bank, Bank of America.

So how do our two remaining megabanks compete? Judging by their television commercials, they are doing their darndest to convince us that they are just as friendly as the little savings and loan where Jimmy Stewart worked in "It's a Wonderful Life." If they don't really know your name, well, they sure would like to.

In a recent television ad, a group of fresh-faced Fleet employees explain their commitment to customer service: "If you need a traveler's check five minutes after closing, I need a traveler's check five minutes after closing. If there is an error on your statement, there is an error on my statement."

Citizens' staff, too, is willing to go the extra mile. In one ad, a Citizens' employee helps an elderly woman carry a bag of groceries. In another, a bank executive opens the bank early to allow a customer to make a deposit. In my favorite ad, a loan officer rides through a car wash with a customer who needs a line of credit. Who knew bankers made house calls?

If big banks pretending to be small banks doesn't strike you as ironic, how about this: The bank commercials show a human side of banking at a time when many customers interact with the bank only through ATMs and computers. For most of us, the only bankers we will ever see are the bankers on television commercials.

What's going on here? Part of the answer is the changing nature of banking. Business lending has been dead for the past few years. The only real action has been on the consumer side, with mortgages, car loans, and home equity lines. Consumers, according to market research, like the idea of banks that can deliver a small-town banking experience.

Larry Fish, chief executive of Citizens, says going to a bank should be like going to your favorite dry cleaner. "I walk in to pick up my shirts on Saturday morning, they know my name, they know my charge card, and if I'm missing a button, they take care of it for me," said Fish. Banks may not be quite that personal, but with the aid of computers that know your name and your credit history, even big banks can provide service that is both fast and customized.

Competition is another factor. Banks are in the money business along with a great many other players. Money is a commodity. Everyone's money is green and everyone charges more or less the same price to borrow it. How do you distinguish yourself in that kind of field? If you are a bank, you emphasize your service and your personal relationship with the customer. "Banks still have an advantage over other financial companies when it comes to trust," said Christopher Gallagher, a New Hampshire lawyer who represents banks.

Richard Holbrook thinks the big banks have yet one more reason to emphasize their personal touch: They are trying to keep customers from defecting to small or midsize banks that historically have had a service edge. Holbrook is president of Eastern Bank. With $4.5 billion in assets, Eastern is a fraction of the size of its bigger rivals. "I think consumers need to be a little skeptical about whether they want to believe the claims of these big banks," he said.

Holbrook has been watching Bank of America ads. And guess what? Bank of America, too, despite its great size, knows you and your community the same way the old neighborhood bank on the corner did. Isn't it a wonderful life?

Charles Stein is a Globe columnist. He can be reached at stein@globe.com.