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On December 2, 2009, community bankers focused on growing core deposits and acquiring new customers in 2010 gathered in Marlborough, MA, to discuss new strategies, tactics and products.  The Massachusetts Bankers Association and First Wellesley worked together to deliver the end-of-year seminar.   First Wellesley’s role was to design the sessions, obtain speakers, deliver a 2010 outlook and moderate session panels.  The MBA had to do all the hard work planning, announcing and managing the seminar.

Here are a few insights I picked up during the day:

From our SurveyMatters^TM polling session of attendees:

• 2009 has been a good year for new customer acquisition for the banks in attendance
• The majority of banks, six out of ten, added more customers this year as compared to 2008
• Half the bankers grew core deposits more than 6 percent as compared to last year
• The vast majority of bankers also project higher core deposit growth in 2010
• Community bankers’ concerns include deposit price competition, big banks’ technology advantages and extensive branch and ATM networks and the risk that Gen X and Y consumers will pursue high-tech banks

Here’s an important “decision maker” I heard about from our end-of-day banker panel: women, specifically their role and influence during the bank and deposit product selection process.   One banker shared his bank’s focus group research findings that indicated that women are responsible for 80 percent of all financial decisions made by households.  Another banker said that a survey of her bank’s junior board of directors, high school students, indicated that 80 percent of the junior directors opened up their first bank account because of their mothers. Mothers selected the bank and the timing of the child’s first deposit account.

I, not having children, was unaware of the primary importance of mothers in the Gen Y bank selection decision.  For Gen Y prospects, it appears that there are two consumers making a buying decision – the high schooler and the parent.   I suspect the parent is the primary consumer for this sale.  Banks would be wise to figure out the deposit account features that most appeal to the parent – electronic linking to the parents’ account, transaction and balance alerts and electronic transfers between accounts are three that come to mind.

One natural strategy, based on this parental dynamic, is to focus on marketing to and regularly communicating with mothers of middle and high school students to obtain more Gen Y customers.  Forms of communication could include branch, drive-thru, online, event and other types of marketing outreach.  The second natural strategy is to emphasize marketing to and providing practical value to women of all ages to acquire new customers and grow core deposits.  These strategies may guide a bank’s channel investments, service levels, product features, messaging and other elements of delivering financial services to consumers.

Next year will provide banks meaningful opportunities to:

• Acquire new customers, some that may be dissatisfied with their current financial institutions
• Acquire more deposits from customers pursuing a deposit “safe haven”
• Lower marginal costs of funds using advanced product and acquisition strategies
• Build brand recognition among Gen X and Y

I want to let you know about an upcoming seminar that we have designed in partnership with the Massachusetts Bankers Association:

Customer and Deposit Management for 2010:
Opportunities, Products and Strategies

On December 2nd, we will discuss the status of live reverse auctions, social media and rewards checking.  You’ll have the chance to hear from fellow bankers first hand as they describe their experiences with new products and strategies.

I’ll present a 2010 banking outlook customized for those of you responsible for acquiring new customers and increasing deposits.  I’ll also conduct a SurveyMatters live polling session so that you can see your colleagues’ views on important customer and deposit issues.

At the end of the day we’ll conclude with a banker’s panel where your colleagues will discuss the challenges and opportunities of customer and deposit management in 2010.

Seminar details can be found at:

http://www.massbankers.org/vango/core/events/eventdetails.aspx?meeting=CDM09

I hope to see you there!

Recently, I had the pleasure of speaking to risk management executives attending the 1^st Annual WolfPac User Conference at the Colonnade Hotel in Boston, MA.  Watch for this conference to grow next year. I provided a 2010 financial industry outlook.  For an hour we explored the economic, competitive, regulatory and Internet issues that will dominate the financial services industry next year.  Major points presented included a shallow, few jobs economic recovery with unemployment peaking mid-2010 and housing foreclosures and home price declines bottoming out year end 2010.  Also, we discussed possible Washington battles of an intensity we’ve not seen in decades over comprehensive regulatory reform, including new and restructured regulators, the proposed Consumer Financial Protection Agency (CFPA) and national mortgage reform.

The industry faces more regulatory uncertainty than most professionals have seen in their careers.

Competition will increase in intensity next year as some financial institutions (FIs) change business models and as some customers leave their FIs for the promise of better deals and relationships at community-based FIs.  I also spent time discussing how the Internet, with its wave of new Internet-based, financial products such as remote deposit capture and mobile banking, has placed a greater responsibility on risk managers to mitigate internal, vendor and customer risks.   Risk management continues to evolve as an essential executive and employee focus for financial institutions.

Monday evening, July 27, 2009, found my wife and me at an event in Boston held by Banker & Tradesman, a Massachusetts banking and real estate publication.  First Wellesley was being honored as the 2009 Gold Award winner in the Bank Consultant category.  We had a great time at the event and enjoyed speaking with Tim Warren, Jr., CEO and publisher.  Tim is the fourth generation of his family to be involved in Banker & Tradesman – an incredible feat given how much has changed in banking and real estate since 1872, the year Banker & Tradesman was founded.

Tim’s been receiving an enormous amount of media attention this year about two big topics – foreclosures and home prices.  In fact, he had to decline a television appearance scheduled for last night to attend the awards ceremony.  I want to thank all of you for your support of First Wellesley this past year! Without you, this award would not have been possible. Our news release is below.

FOR IMMEDIATE RELEASE

Banker & Tradesman Best of 2009 Readers’ Poll

Wellesley Hills, MA, July 27, 2009 - First Wellesley Consulting Group, Inc. has been named the Banker & Tradesman Best of 2009 Gold Award winner in the Bank Consultant category.  On Monday, July 27, 2009, First Wellesley accepted the first place award in Boston, MA, at a ceremony honoring this year’s award winners.  First Wellesley is honored and pleased to be designated the top bank consultant by Banker & Tradesman.

“We are truly honored to have been chosen by the Banker & Tradesman readers.  We thank the readers and our clients and colleagues for their confidence in us,” said James D. Jones, President/CEO, First Wellesley Consulting Group, Inc.

Banker & Tradesman, founded in 1872 and headquartered in Boston, MA, is published by the Warren Group.  The Warren Group provides comprehensive banking and real estate news and data throughout New England.

• The ceremony honored the best providers of services in the banking and real estate professions.
• Over 3,000 readers voted for the providers that they believe are best in numerous banking categories.
• “This is a subjective, not objective poll. It does not measure who writes the most business, who has the most revenue or the most customers. It does measure the loyalty and satisfaction readers have with vendors. It is an opportunity for readers to speak up for those providers they believe are the best,” said Vincent Michael Valvo, Group Publisher and Editor-in-Chief, Banker & Tradesman.

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Every year I have the pleasure of teaching at the NESFFS.  My topic is strategic planning.  This May, the Class of 2009′s sixty-eight students graduated from the program after an intense week at Babson College.  We divided the students into twelve teams and each team managed a bank, in competition, for one year using simulation technology.  In addition, each team created a five-year strategic plan.  That’s my area.

During my Thursday lecture on strategy setting, the students completed one team exercise that illustrated why banks in real life are not identical.  I asked each of the 12 teams to identify one core deposit growth strategy.  The teams huddled together to identify their recommended growth strategy.  Interestingly, the 12 teams ended up recommending a total of 9 different strategies.

Remember, the objective was to grow deposits and expand market share.  Teams, during debriefing, presented strategies that ranged from merger and acquisition, new products, advanced technologies, sales and marketing and community outreach.  Ideas included adding business development officers, offering generation-based product families, making deep investments in advanced Internet and CRM technologies and buying a bank.   What was clear was that the teams did not believe that there were only one or two “best” growth strategies to achieve growth.  Each bank viewed the challenge differently and selected different strategies.

Their strategic decision making mirrors real life.  Banks do not pursue identical strategies and do not operate using the same business model.  The variety of responses illustrated that management teams choose different strategies to achieve the same objectives based on a specific bank’s management team, market opportunities, customer mix and core competencies.