Community Banks are Different…but Bank Directors are Perceived to be all the Same

After watching the dismal performance of Big 4 Bank CEOs, it’s easy to see why people don’t like bankers.  I’ve been a bank director for a year now…and not one person has been interested in my new position.  It’s an unpaid role in a small, startup, community bank – not a Big 4 Bank.  I’m excited by the opportunities this role offers, because my bank directly helps the local community.  But people don’t seem to differentiate.  All bank directors are unpopular, it seems.

What is a ‘Community Bank’?

Most people have no idea what a ‘community bank’ is.  Do you?  A community bank is a bank where the shareholders are locals, the customers are locals, the directors are locals, the staff are usually locals andmost of the profits from the organisation go back to the community, not to shareholders.  Yes, that’s right, profits go back to the community, not the shareholders.  In our area, the local community banks have given over $1m back to community and local organisations this year!

But people – even local people –  don’t seem to understand this.  They don’t seem to see the difference or appreciate that, by banking with us – a community-centred bank – there are very different benefits for the community compared with banking with the Big 4.

And that’s why I’m a director.  I’m involved in this community.  I want our community to be better, to succeed.  We need banking services.  Our community bank is, in fact, the only bank physically located in our community.  It’s the only one with wholly local shareholders, the only one with unpaid directors, the only one giving back directly to our community.  It seems natural to want to be a director and help the organisation…so it can help the community.

What’s the problem?

Directors from other branches say they have the same problem, even though they have been around longer than us.  I think there are several reasons for this.  First, we are a franchise of a Second 4 bank.  So we are seen as part of that large bank, whereas we are in fact a very local franchise, with only one branch, dedicated to our local community. Second, banks are on the nose.  Despite high customer satisfaction ratings and trust on ordinary transaction dealings, recent Big 4 bank scandals over financial planning, life insurance, loan redemptions, interest rate manipulation, high credit card rates, exorbitant late payment fees, high executive salaries and bonuses and the high returns generated from what are effectively government guaranteed organisations (they are, we aren’t, at least not to the same level) have made consumers angry at how Big 4 Banks feather their own nests at customer expense.  Third, directors of most organisations are assumed to be highly paid, doing little.

Community banks and their directors are not like that.

But we ‘look’ the same.  People are shocked when I explain our business model.  They are impressed. But it is difficult to change banks when you are locked in to a package, don’t like the paperwork involved in change and unsure what personal costs or benefits you will get from such a change and when the community branch in our town looks just like the corporate branch in the town nearby.

Can we overcome the perceptions?

We’re a startup.  We’re learning the ropes.  It takes time to build credibility.  Our message, though simple, is complex to deliver and understand.

I don’t want praise for taking on this role. I want people in our community to recognise the benefits to them and our community from banking with us.  I want to help our bank to get more business so it can deliver more benefits to the community.  But it would be nice if people were interested to enquire, rather than prejudging that all banks and all bank directors are the same – out to gouge customers.


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