SUSAN O’DONNELL
Opportunity for small banks

Bank of America has yet to reveal its New England advertising strategy following its recent merger with Fleet Bank, but the unique market environment promises an equally unique campaign.

Rather than adopt a blanket strategy that can be universally applied to any location, North Carolina-based Bank of America officials said the bank is more apt to customize its marketing to suit the region.

“We don’t have one specific approach. It really depends on where the merger is and what the customer base is. It’s community-specific,” said Tara Burke, a Bank of America spokeswoman.

New England certainly provides a distinct set of circumstances within which to work.

“The reality is that New England has a unique culture. It’s not like the other markets [Bank of America] has been in,” said bank analyst John Carusone, president of the Bank Analysis Center in Hartford, Conn.

Many factors set the New England area apart from Bank of America’s existing areas of operation, predominantly the Southern states as well as California.

The Northeast has a history of resistance to outside infiltration and while the words “the British are coming!” no longer echo throughout the streets of Boston, community banks may be heard whispering, “the big bank is coming!” instead.

While Bank of America is certainly well known – following the merger it became the No. 2 bank in the nation – that does not necessarily mean that it will enter the marketplace with guaranteed success, according to some industry watchers.

“Clearly, Bank of America is the most recognizable name in retail banking in the country, if not the world, but they need to competitively differentiate themselves from community banks and other New England institutions. The competition is going to be fierce,” said Carusone.

No one knows that more than the community banks themselves, which are being forced to re-evaluate their own strategies in the face of a changing marketplace.

“The sheer size of Bank of America and their ability to perhaps spend inordinate amounts of money on marketing will have community banks like our own thinking of the best ways to streamline and put forth our products,” said Sue Lincoln, senior vice president and director of retail banking for South Coastal Bank in Rockland.

Some presume that Bank of America will use its status as a national institution in order to promote itself and separate its services from its competitors.

“Bank of America is going to compete on the basis of their broad product range, the convenience of coast-to-coast banking and most likely on the basis of price, [especially] lower loan rates,” said Carusone.

Bank of America has already waved ATM charges for Fleet customers and “is giving away Internet banking,” said Stanley Ragalevsky, a partner with Boston-based law firm Kirkpatrick and Lockhart. “That is a huge step for Bank of America to take,” he added.

Though they may be offering a variety of incentives, products alone may not be enough to distinguish Bank of America from its community bank competitors.

“[Bank of America] has and will promote their checking product line. But the trouble they may have is that their line is not very different or any more free than the rest of the banks,” said Lincoln.

Sense of Community

While the sheer size Bank of America may be viewed as a threat to community banks, it may also prove to be an opportunity.

“Community banks probably aren’t happy [about Bank of America’s presence in New England], but they may see it as an advantage for them to help them compete,” said Susan O’Donnell, senior vice president of Clarke/Bardes Consulting in Duxbury.

“We’re looking [at the merger] as an opportunity for customers that are tired of being just a number,” said Lincoln.

The connection that smaller banks have with customers and their standing within the community are perhaps their strongest points of leverage.

“Community banks are going to compete on the basis of personalized service and flexible solutions rather than rigid guidelines from an out-of-state corporate headquarters. Smaller community and regional institutions are going to say that ‘we are the local alternative to a national bank,'” said Carusone.

Many experts predict that Bank of America’s advertising campaign will attempt to establish itself as a part of the community, despite its national scope.

“Bank of America really will need to show that they do care about the customer and that they aren’t just this big corporate entity,” said O’Donnell.

Though the bank’s marketing strategy in not expected to be released until the third quarter, some say it seems as though Bank of America has already begun making strides towards a more customer-based approach. Fleet often focused more of its attention – and marketing dollars – on its business banking lines.

“I think that Bank of America is much more focused on the consumer marketplace than Fleet has been and they seem to have it as a part of their culture that they’re going to provide quality services to their consumers as a primary focus and not as an afterthought,” said Ragalevsky.

Bank of America recently announced a 10-year nationwide goal to put $750 million toward community development, strengthening their stance in local areas, though that may not be enough to establish itself as a community instiution.

“[Bank of America] is focused on being a community bank to the extent that it can Â… but mostly what they’re talking about is investing in the community, which is very different from being in the community,” said O’Donnell. “Really, what is a community bank? Is it because they’re investing or is it because they’re in it? The question will be whether their image reflects that they are really a part [of the community].”

There are some areas to which the battle for business doesn’t extend, however, often involving larger transactions.

“What a lot of people lose sight of is that big banks Â… are colossal organizations in terms of their size. They are focused on things and commercial business that community banks simply aren’t going to be able to compete for even if none of the mega-banks were in the New England marketplace,” said Ragalevsky. But in terms of acquiring customers, “there’s very much a ‘tortoise and the hare’ aspect to the story,” he added.

While the competitors are just now toeing up to the starting line, the outcome of the race will not be known until customers have seen their options and been given a chance to decide which approach to banking they prefer – small and nimble or large and powerful.