The Wall Street Journal published an article yesterday highlighting the success of a local bank in Amish Country. This is the only new bank opened in the US since 2010. The founder cites high demand, stating the bank has done more than $60 million dollars in loans after the first year. The WSJ adds: "Last year, the more than 6,000 locally focused 'community banks' in the U.S. increased their combined earnings by 9.1% from 2013". This suggests that something occurring in local banks motivates people to use them more and more. While the article later stresses that the success of this local bank may be challenging to replicate as Amish businesses, where the bank makes most loans, tend to be financially stable, there are several key points I think can be applied to our challenge. These I see as important lessons regardless of whether the financial institution is local or a national chain.
1. Build Trust by Including Locals
"William O’Brien, chief loan officer at the Bank of Bird-in-Hand, closed so many loans in the bank’s first year of business that locals call him 'Gelt Chappie,' or 'money man' in Pennsylvania German."
The community nicknamed the bank founder. I cannot name one teller at my bank. In fact I do not even go to a brick-and-mortar bank. I call in when I need help and get shuffled around from person-to-person every time. A way to prevent distrust and encourage participation might be to hire locals. What could be a great way to connect someone with basic financial services? Train their neighbor to be the community banker.
2. Understand the Particular Community the Bank Serves
"'There was, still is, a pent-up demand for a local bank,' Mr. O’Brien says, describing a local man who manufactures mattresses for dairy cows. Though the mattresses are common in dairy barns, the man told Mr. O’Brien he had trouble getting a loan from a large bank, which didn’t understand the product."
The large bank did not understand the needs of one of the communities it served. Because of this a local man turned away from the institution. In order to convince people to utilize banks for anything from a loan to education, banks should prove they understand community values. Again, as under point 1, community values are best represented or relayed by an actual community member. If this is not possible the outside organization should learn the bespoke needs of that particular region.
3. Word Travels, Fast
"'He never forgot that,' Mr. O’Brien says. 'And that gets around.'"
The man in point 3 spread the word that the large bank could not fulfill his needs. We are all aware that news spreads. Leaving a positive impression with one individual could convince more to seek out financial services and support.
4. Web Isn't Everything
"The bank doesn’t offer online banking, but its sole branch does have a drive-through window that can accommodate a horse and buggy."
It is easy to get wrapped up in the latest technology. While it remains important for many, empowering others might require something completely different. And, what works in one community might not work in another. Putting a horse and buggy window in a bank in Manhattan would not be effective. But perhaps making a banking window low enough that a rickshaw could drive through in another community might be a necessity. The Amish bank does not offer online banking because its members would not use it and it would be a waste of money to implement.