This N.J. banking success story is proof that customers crave service in difficult times
After the pandemic forced the big banks to expand their payrolls and expand their digital banking and customer support offerings, they returned to what they know: to wield the ax.
This year, six top US banks announced layoffs and branch closings as part of aggressive cost-cutting measures. Wells Fargo announced, for example, that it is laying off a quarter of its workforce in an attempt to cut expenses of up to $ 10 billion in the coming years.
The opposite is the case at New Jersey's 88 state-chartered community banks, where many are thriving thanks to an explosion in home mortgage refinancing and the profits generated by running the paycheck protection program.
"This gave us a great opportunity to reconnect with our customers and help them with this pandemic mayhem," said Jane E. Allerman-Rey, president of Spencer Savings Bank, which has 20 branches in northern New Jersey and over $ 3 billion has in assets. “It was a great opportunity to attract new businesses.
"When life gives you lemons, you make lemonade."
Allerman-Rey said Spencer processed 370 PPP loans for $ 35.3 million last Monday. With Congress extending the program through May 31, community banks should see even more potential customers, especially as the current round of PPP lending appeals to smaller businesses. That year, Allerman-Rey said, loans averaged $ 70,000 and borrowers tended to have fewer than 20 employees.
Allerman-Rey, who was promoted to President of Spencer in Elmwood Park late last year, said many PPP clients came to the bank after receiving their small business administration loan application from a major national bank.
"We checked the SBA system to see if they were approved and they were never told," she said. "I could see the consequences of these poor people who were customers they really didn't care about."
There is a whole class of community banks that process online loan applications in bulk instead of focusing their business on traditional face-to-face customer service. They are called fintechs whose business is to provide loans for smartphone applications owned by high-tech venture capital startups.
New Jersey's most active company is Cross River, which has a single office in Teaneck with assets of $ 2.5 billion. However, Cross River employees at Fort Lee's headquarters are making $ 1 billion in loans every month, most of it from online applications. It is one of the best PPP loan processors in the country.
There are nearly 5,000 community banks in the United States today, according to the Comptroller of the Currency. They tend to operate in rural areas, underserved communities, and cities and towns like New Jersey. The banks are small, locally-based institutions closely linked to small business, agricultural and consumer lending.
At one time, community banks were the pillars of the broader communities they serve when customers chose a bank based on their proximity to work or home. However, as customer preferences shifted to online banking, their proximity to branches became less important.
The pandemic only accelerated this trend.
A consumer survey by Fiserv from May 2020 found that 36% of bank customers use fewer ATMs in branches, 27% more mobile check deposits and 33% more mobile payment applications.
Therefore, the community banks are faced with an important question: How do they maximize contact with their customers when visiting the branch is less important? Community bankers say they work hard to reach their customers and stay with their borrowers during tough times like the COVID recession.
“When people have a hard time finding someone to help them, then we shine. When things get tough, customers call us, ”said James D. Nesci, president of Blue Foundry Bank in Rutherford, formerly known as Boiling Springs Savings Bank.
"We believe that when the big banks pull out, this will be the time when we lean forward," he said. “I can't tell you how much hand we hold. Every name is important. We'll call you personally. We keep finding new ways to touch our customers because we believe this is really important. "
The $ 1.6 billion Blue Foundry recently underwent major renovations to its 17 branches across the state. The company filed an initial public offering with the Securities and Exchange Commission in March at a price of $ 10 per share.
"We're just trying to get one customer at a time with great customer service," said Nesci. "Every customer is more meaningful when you are with a small bank."
George Jordan writes a weekly column on New Jersey business and development. He can be reached at george@griotmediaworks.com.
read more
Comments
Post a Comment