The little guys have an advantage
By Bo McDonald
“But we’re too small.” A phrase I hear muttered all too often among those who compete against the “too big to fail” banks. We all like to root for the little guys and the under dogs, but in the back of our mind we always have a feeling that they’re just not going to make it. Rubbish! The only way the little guys won’t make it is if they refuse to innovate and differentiate.
Bloomberg recently ran an uplifting story about why it’s good to be the little guy when it comes to banking. The article, “Rural Banks Know Something Big Banks Don’t” did a great job highlighting a handful of small financial institutions that are not only surviving, but thriving.
The article stresses a very important, yet overlooked piece of the puzzle when it comes to marketing and competing head to head with the goliaths of the financial industry: social capital. Social capital is the expected collective or economic benefits derived from the preferential treatment and cooperation between individuals and groups.
Ken Hale, CEO of Bank of Montgomery points out just how important social capital is to the success of his organization. Here’s what he said when interviewed for the Bloomberg article: “You can’t be greedy. You can’t be devious. Because I gotta go home every day and see my two neighbors.”
Hale pointed out that many of his neighbors have mortgages with his bank; and many other families attend the same Catholic church and school. “If I take advantage of them with some subprime loan, I gotta sit next to them.” Two of the branches that he oversees are in towns with fewer than 500 people. What happens if you treat a customer poorly? “There aren’t a lot more people to choose from.”continue reading »