Boston is the backdrop for some of the most prestigious financial companies in the world. The attractive demographics of Boston are based on the elite institutions that employ and educate Boston residents. Boston banks have seen a high level of customer turnover due to consumer dissatisfaction with fees and an overall impersonal banking experience. As a result, the onus is on Boston-area banks to respond to the needs of a highly educated populace.
In 2012, banks and consumers will be faced with:
- Vanishing bank branches;
- Increased online banking; and
- The ongoing battle of fees versus convenience.
Due to the numerous universities, hospitals, and high tech employers in the Boston area, the average Bostonian tends to be more educated than his or her domestic counterparts. However, our country’s ongoing financial predicament has caused people to augment their understanding of the banking world’s nuanced machinations.
In particular, Boston's consumers now have a greater grasp of the repercussions of their banking choices. Community banks have been well positioned to take advantage of this new awareness, using their local ties and the local ties of their decision-makers to cater to local markets. Thus, a borrower is ensured that the totality of her circumstances will be taken into account when she applies for a loan from a community bank.
Vanishing Bank Branches
Many banks expect to face challenging market conditions in 2012. Consequently, numerous lenders that do business in Massachusetts will close branches in a move to deliver sustainable cost savings to shareholders. Consumers are now mindful of the fact that a company with corporate headquarters across the country may lack the ability to form a personal connection with its customers.
Thus, consumers in Boston will be faced with adapting to the local restructuring of larger banks that are seeking to steer clear of staff redundancies. Hence, well-run community banks will be poised to enlarge their market share, while their competitor’s bank branches vanish. Cost effectiveness is the name of the game for most banks, which will lead to a further reduction of services available to consumers. Branches are seen by the managers of larger banks as places to provide more individualized care to customers. However, it is in the best interest of a community bank to see all customer contacts as opportunities to connect with consumers on a personal level. The personal touch of community banking has the potential to make the banking process more user-friendly for customers and counterbalance the closing of branches by larger lenders.
Increased Online Banking
As computer technology improves, Boston’s consumers will benefit by an amplified level of convenient banking software. In recent times, larger banks had a monopoly on state-of-the-art technologies but community banks are now capable of providing the most up-to-date online tools to consumers. Greater Boston residents demand quality and savvy community banks will respond by providing free mobile banking that allows customers to check balances and pay bills using cell phones and/or mobile devices. Further, the elite community banks will increasingly provide text message banking, which allows customers to obtain information via text message. At the customer’s discretion, community banks will have the capability to send email alerts to customers related to when bills are due, when deposits and/or withdrawals are made, and provide up-to-the-minute account balance information. Moreover, due to the proliferation of accessible technology, Boston’s community banks will be able to allow seamless interactivity with popular software programs, such as Quicken Access and Turbo Tax. Advances in technology, will give consumers more banking options without sacrificing the quality or security of the services received.
Of course, this puts them in competition with online only banks like Ally and ING Direct. Community banks will have to leverage their local knowledge and relationships to bring in new clients.
The Ongoing Battle of Fees versus Convenience
Anger over fees will continue the trend of consumers seeking banking alternatives. Simultaneously, the price tag for convenience will continue to decrease due to the growing availability of banking software. According to the Yankee Group, more than 40 million consumers will be using mobile banking tools in 2012. Consequently, Boston community banks will increasingly service the needs of Android and/or other mobile device owners. Since the financial crisis, there has been decreased customer loyalty towards banks. Accordingly, the abundance of banking technology will lower the costs of services, which should provide an increased advantage to well capitalized community banks that are able to provide the exact same services as larger banks.
In short, the three banking trends for 2012 will present ample opportunities for community banks to provide improved services to an emergent customer base.
Lennox Chase is an attorney who sits on the board of directors for Needham Bank. Attorney Chase is also the founder of MyBarPrep, a tutoring company for lawyers and law school students.
The author is solely responsible for the content.
Meet Boston's coolest, smartest and most dynamic founders in our REEL Innovators video series!