Upon reading some recent articles about how banking behemoths like BofA and Chase are “driving to be local in more markets,”1 and because I guess the holiday season is not that far off, I’m reminded of one of my most favorite scenes in all of moviedom. I’m sure most of you will recognize right away “from whence it came.”
MEDIUM SHOT: George's father is seated behind his desk, nervously drawing swirls on a pad. He looks tired and worried. He is a gentle man in his forties, an idealist, stubborn only for other people's rights. Nearby, in a throne-like wheelchair, behind which stands the goon who furnishes the motive power, sits Henry F. Potter, his squarish derby hat on his head. The following dialogue is fast and heated, as though the argument had been in progress for some time.
BAILEY
I'm not crying, Mr. Potter.
POTTER
Well, you're begging, and that's a whole lot worse.
BAILEY
All I'm asking is thirty days more . . .
POTTER
Have you put any real pressure on those people of yours to pay those mortgages?
BAILEY
Times are bad, Mr. Potter. A lot of these people are out of work.
POTTER
Then foreclose!
BAILEY
I can't do that. These families have children.
POTTER
They're not my children.
BAILEY
But they're somebody's children.
POTTER
Are you running a business or a charity ward? Not with my money!
BAILEY
Mr. Potter, what makes you such a hard-skulled character? You have no family, you have no children. You can't begin to spend all the money you've got.
POTTER
So, I suppose I should give it to miserable failures like you and that idiot brother of yours to spend for me.
I don’t know about you, but to me, the big banks – like Potter was – just might be missing something really important here. And this scene between Bailey and Potter sums it up beautifully. What, exactly is Potter – and right now the leaders of America’s biggest banks – after? Young George lays it out for us:
GEORGE
I know very well what you're talking about. You're talking about something you can't get your fingers on, and it's galling you.
That “something,” of course, is money. Apparently, right now – even with some bragging about having “$30 billion of excess capital" – that’s galling the C-level folks at a couple of America’s largest institutions. So, what are they going to do? They’re going to try to pull a “Potter,” i.e., build branches in “underserved” (perhaps they should use the label “not yet profitable”) areas and compete with the Bailey Brothers Building and Loan institutions of this country. Why? Because, well, it's just smart business…
POTTER
Now, you take this loan here to Ernie Bishop . . . You know, that fellow that sits around all day on his brains in his taxi. You know . . . I happen to know the bank turned down this loan, but he comes here and we're building him a house worth five thousand dollars. Why?
So, how will they do it? Well, my guess is that they’ll start by trying to woo long-time members of the community, those bankers who, in reality, define community banking. What else can they do? Move one of their Park Avenue-based wealth managers to a small town and try to convince that “underserved” community that this individual knows the local economy and civic groups, the small businesses, the important charitable organizations, the members of the Rotary Club and the 4H? Not going to work.
What can small banks do in response? “Experts,” so I’ve read, seem chock full of advice to community banks that, in summation amounts to, basically, “fold up your tent and get out of town.” The big banks, they say, “have demonstrated that they can get ‘locality’ right.”
Here’s my advice, friends in community banking: Keep doing what you have always done so well and what the big banks can’t. Continue to demonstrate your higher ethical standards and commitment to the community. Offer lower rates and fees. Approve those loan applications from individuals who’ve scored less than 850 on their credit report. Teach those Junior Achievement money basics classes at the local middle school. Get a team together for the annual “Let’s beat breast cancer” 5k run. And put aside artificial intelligence for the human kind so that you continue to foster those personal, trusted relationships.
Let's face it. Or, at least I believe this is so: Even a big name and a big budget can’t compete with that.
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1The Financial Brand. How BofA is driving to be local in more markets. July 8, 2024.