A Community Bank’s Differentiation Strategy

Life is not easy for community banks these days. Like the rest of the industry, they struggle with increased regulatory burdens and costs while dealing with the added disadvantage of competing with larger national and regional players who possess more marketing and technology resources.

Yet, community banks retain a few cards to play such as local presence and a more nimble decision making process. Maine’s 140-year-old, $700 million-asset Androscoggin Bank plays both cards in its effort to stand out from the crowd, according to Chief Customer Officer C. J. Conrad. As Conrad explains in the following interview, inventive marketing can go a long way in differentiating an institution in its community while digital technologies such as smart phone banking and the iPad can give community banks a chance to go toe-to-toe with larger institutions on advanced services – even without a big information technology budget.

Q: How do more community-oriented banks like Androscoggin position themselves against some of the deep-pocket giants as a viable banking alternative?

Conrad: Local decision making. Our lenders, our president and the back office personnel live, work and play in our community. We feel we’re a little more accountable for the decisions we make because we’re a part of the community. At Androscoggin Bank, you can realistically walk in and talk to the bank president. It’s nice for the community to know the president’s office is in the same town, not five states away. That’s an advantage, especially in these hard economic times. It’s more salient now than in times of prosperity.

Q: Marketing is increasingly important in today’s banking environment. Androscoggin and other community banks lack big budgets so how do you make your marketing dollars count? How do you differentiate your offerings in a crowded field?

Conrad: Any community bank should first have a clear vision and customer profile that they’re moving toward. We’ve gone through that process. Our ideal customer is someone who is actively engaged in their financial future, someone likely to use at least two of our key services: Retail and Municipal Banking, Trust Services and Small Business Lending. Our customer is slightly more mature, but active and involved in the community and business. We differentiate ourselves in this market by introducing innovative products, offering added value through education and bringing the latest technology to our customers.

We are continually planning and analyzing in order to focus our marketing dollars efficiently. A big part of that effort is the Internet. The Web is a great way to get as much or as little exposure as you want at a relatively low cost. We’re moving a lot of our dollars to the Internet and focusing on content creation and development as a marketing strategy to gain exposure.

Specifically, our Web analytics recently indicated that not a lot of traffic was moving from the home page of Androscoggin Bank to the business-line specific pages such as Trust Services, Mortgage and Government Services. So, we’re in the process of launching micro sites for all business lines. Matching the right information with the right customer faster and easier results in a better experience for the user and ultimately a higher conversion rate for the bank. AndroscogginMortgage.com and AndroscogginTrust.com are finished and the Government Services micro site will be launched later this year.

So far this year, we have increased our visits by about 14% over the same time period last year and we’ve increased the average time on our site by three seconds.

Q: Focusing on the use of smart phones and other mobile options seems to be a significant part of Androscoggin’s plan to stay viable. Yet again, resources are an issue. How do you put together a mobile option that appeals to your customers when you lack the big IT budgets enjoyed by the larger banks?

Conrad: The larger banks spend a lot of money on research and development so they are always on the cutting edge. We want to be what we call a “fast follower.” We may not have the technology first, but we strive to be in the second or third wave. While we don’t have the budget that a national or regional bank might have, we feel we can make smart choices on appropriate technologies. That’s a key part of any community bank’s strategy; we make smart choices based on our customers and our business.

For our region, in terms of mobile banking, there are not a lot of community banks who act as fast followers. Given our customer profile and the activity we’ve seen, we felt that people need to move their money fast, in a 24-7 environment, and do it securely. That was our choice. So, we’re developing a mobile optimized Website and working with vendors to understand how we can further leverage the mobile channel to reduce account fraud and ultimately be a leader in mobile payments.

While we are offering mobile banking through a vendor, it is still possible to differentiate. Only the online banking piece is “off-the-shelf.” The mobile optimized Website, the education campaign about safety in mobile banking, realizing the opportunity for seniors using iPads to use the channel, and our ability to leverage the mobile channel to better communicate with our customers are all part of the strategy. A mobile strategy is only 10% off-the-shelf; 90% of a successful mobile campaign is what the community bank does after implementation.

Education is a huge component of what we do. Maine’s population is among the top five oldest in the nation, so our consumer base is likewise mature. Some might wonder why a bank like ours would emphasize mobile banking. But with today’s technology, devices such as the iPad are easier to run and maintain than a laptop. You touch one button that says “bank” and you’re banking online without having to know what a URL or a browser is. So, it’s a great opportunity to educate and convert some of our customers who normally would not understand online banking and help them jump directly into mobile banking.

Mr. English is a freelance writer based in Chicago.