ABA Banking Journal - November 2008 - (Page 54)

100 years fact that if they have an issue, they have a place to speak with a human being, noted Gurgovits. He said FNB has done studies documenting this. A combination of electronic delivery and a branch system is what the customer likes, he said. Branch growth slowing Despite that, Gurgovits allowed that his bank has more branches than it needs, mainly because of acquisitions. “We do very few de novo branches,” he said. Nevertheless, those that the bank has are very important, he adds. “The value of the community bank branch is the ability to gather deposits, so we spend a lot of time on deposit goals for the branches.” Anthony says that not only is Synovus not opening many branches, it will probably end up closing some of the more than 300 it already has. “For us branches [are becoming] less transactional centers and more a platform for sales and growth,” he added. “To me the platform for sales is more important than just the convenience of transactions, because there are other ways that people can get their business transacted today.” On the internet is one way, of course, but so is remote deposit capture, which all the bankers felt was a very significant service advantage for those that provide it. Anthony said Synovus promotes RDC heavily, adding that the company won’t have to invest as much in bricks as a result. An emerging technology that was mentioned was mobile, or cell-phone, banking and payments. “Inevitably you’ll have all your payments in your cell phone” said Guy Williams. “All your credit cards will be loaded there, and your debit card—you can pick the one you want to pay with. People can forget their credit cards, but anybody age 30 or below won’t lose their cell phone for five minutes.” Synovus already offers mobile banking but Anthony says it is mainly an accommodation at this point for the younger segment of the market. “We know the world is moving in that direction,” he added. The generational challenge It’s probably always been an issue, but it does seem that the customer generation “gap” is wider now, thanks in part to technology, as just described. It’s an issue that challenges family-owned banks as 54 NOVEMBER 2008/ABA BANKING JOURNAL much as publicly traded regionals. “We have really good relationships with the older customers—the ones with the money right now,” said Luke, whose bank, Hawaii National, caters to small businesses, “but you have to prepare yourself for the next generation taking over the business. They expect everything online.” Operating in Pennsylvania and Ohio, FNB serves a mature market with traditional products. “That’s the way they like to take their financial services,” said Gurgovits. Like Luke, he recognizes that the next generation wants their services differently, which poses some challenges. “We do a lot of direct marketing in the lobby,” he said, “but that’s not going to work with the younger people. They’re not going to be coming into the lobby.” It’s an evolution. Marinangel suggests putting young people on staff who will have new ideas and know how to relate to and deal with new technology. Luke has seen the benefit from that, as well, with the next generation of his family coming into the bank. “My key people are under 35 now,” he said. “The thinking is different, and it’s refreshing.” Solutions to margin squeeze The group was in agreement that margins were likely to come under pressure again. “We’ve all been doing better because rates have come down and we priced CDs shorter so we could reprice,” said Marinangel, “but when rates rise again, banks will have net interest problems.” “If you look at most of our income statements and the mix of revenues,” said Anthony, “you find that none of us has enough diversification. We’re more and more dependent on the spread side, which can be volatile.” “We’ve always had a higher-than-average margin for a company our size,” Anthony continued, “but as we look into the future, we’re pretty confident that the margin is not going to be what it used to be. So we’ve got to get our companies structured right to match the opportunity that comes from that. He said that Synovus had been focused over the past year “right-sizing” in terms of head count and infrastructure. Others said they are doing similar things to become more efficient. Luke pointed out that a contributing factor to the margin squeeze is the competition from nonbank players that have tax and compliance advantages—credit unions in particular. The public looks to banks for safety and soundness, he said, but the basic consumer doesn’t know the difference “You have to prepare yourself for the next generation taking over the business. They expect everything online” Subscribe at www.ababj.com http://www.ababj.com

Table of Contents Feed for the Digital Edition of ABA Banking Journal - November 2008

ABA Banking Journal - November 2008 Contents Editor's Column Banking 2.0: Credit, Banking's Essence, Set for Rethinking Snapshot: The Few, the Proud, the Banks that Can Raise Capital Will Strong and Simple Banks Inherit the Business? Back to the Future ABA Resources ABA Chairman's Position Farm Lenders Must Take Care When Lending in Indian Country Pass the Aspirin Into the Breach Adventures Across A Century What the Future Holds, Post Crisis Paul Volcker: A Financial Legend Still Speaks Strong Ed Yingling: Weathering the Storm Dick Kovacevich: "Boring" Banking to Dynamic Financial Services Jim Culberson: Community Banking: What has Changed and What Shouldn't Walter Shipley: How a Chemical Reaction Helped to Mold Today's JPMorgan Chase William Isaac: Challenges and Opportunities Ahead for Banks A Hundred Years from Our Pages Eight Tech Innovations that Brought Banks into 21st Century Bank Cherokee: Third Generaton Marks 100th Year The First National Bank of Altavista: Railroad Gave Birth to a Town, a Hope Chest, and a Bank Rosedales Federal Savings and Loan Association: How a Friendly Game of Cards Turned into a 100-Year Mutual New Washington State Bank: Cooking Up the Next 100 Years Mailbox Banker's Mart To Advertise/Index of Advertisers The Economy

ABA Banking Journal - November 2008

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