Bucking the Trend: A Bank Offers the Model (Main Street versus Wall Street, Part 2)

Earlier this year, I wrote an article for Bank Marketing News entitled, Main Street Versus Wall Street. The article discussed how credit unions and community banks are well positioned to address the needs of the communities they serve at a time where our communities desperately need our support.

I recently read an article about another organization that bucked the tide and stayed with a core competency strategy rather than "reacting" to the market. Their strategy was to expand utilizing a contiguous market strategy, retain conservative, relationship-based customer acquisition and retention, and not react to pressure from either the market or their shareholders. Between fiscal 2007 and fiscal 2008 they increased their net profits by 64% and their asset base by 94%.  They also have an average “sales” base measured by assets of almost double the average of their industry.  The punch line is that this organization is a bank: Hudson City Bancorp.

As an executive with one of Oregon’s largest credit unions we made a collective decision as well to "buck the trend" and pursue a core competency-based strategy, rather than try to be what we were not, a bank. Similar in some ways to Hudson City our strategy involved some key elements:
  • Execute a sales and service strategy. Sales doesn’t mean pushing products, it means understanding the needs of your customers and addressing those needs. It means figuring out what you do and don’t do. It means focusing on what you do best and doing it brilliantly.
  • Deliver at the local level. Put the community back in community bank and community credit union. You notice that Hudson grew in contiguous communities. They took advantage of their presence and reputation rather than going after markets where they had no presence or a limited presence.
  • Invest in your community. It would be interesting to see how many community organizations and initiatives have been left in the dust as large financial institutions crash and take their budgets with them. In many cases these large organizations wrote checks, but did they truly invest? Are their opportunities for you to invest in your community, not only with dollars, but with volunteers and time?
  • Know your “core” base. When I was in manufacturing years ago we knew who are key customers were and how much of our revenue they represented. We also knew what our most profitable products were and we concentrated on them. Both Hudson and my former employer spent time knowing who really represents their base- current and future. You cannot be distracted by a market fluke rather than a market trend.
  • Engage your employees. Some recent information I read indicated that highly engaged employees contribute on average 21% per capita more than non-highly engaged employees. Organizations that have created high employee and high customer engagement outperform their peers by 100% on key metrics!
  • Look for efficiency. Again from my manufacturing background we lived in an environment of continuous improvement and “efficiency.” We looked at our processes and those of our “suppliers.”  We treated our key suppliers as partners, not vendors. We worked with them to improve quality, reduce costs and jointly identify and solve issues.  Quite bluntly, most financial institutions I have encountered are very adept at this.  I am talking at a more basic level than your core operating system.  Have you examined how you purchase services, outside supplies, and how they move through your organization?

Another article I read recently offered implications for our leadership models.  We are famous for consensus and process, for minimal risk taking and change.  The article said that our current environment calls for new models, decisive leadership, and action.

During his inaugural address, President Obama indicated to us all that we are facing a huge challenge that will require the investment and energy of all of us.  I would submit that he is right, and that the real solutions to this crisis will come at the community level, not from the congress or the “national” banks.  The solutions will come one family, one community at a time.  Isn’t that what we represent?

We have complained for decades about the banks and the regulations, and all the other factors that have impeded us.  Now is our time. We can hunker down and husband our assets or we can step up and offer solutions in our communities.
Buck the trend, and ask yourself: If not us, then who?  If not now, then when?

Mark F. Herbert is a speaker, author and consultant with over thirty years of experience helping organizations like Honeywell, SpectraPhysics, Mobius, Oregon Community Credit Union and others take their organizations from Compliance to Commitment™.  Herbert is a principal at the consulting firm of New Paradigms LLC.  He recently published his latest book, Managing Whole, One Man’s Journey, now available at amazon.com or at www.newparadigmsllc.com.   Contact him at Mark@newparadigmsllc.com.

Posted by Mark F. Herbert at 1/28/2009 12:29 PM
Categories: Credit Unions, Management
 

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