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The Changing Faces of Banking
From local bankers' perspectives, the job of banking has undergone revolutionary change in just a few years
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Business New Haven
10/27/2003
By: Melissa Nicefaro
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Remember when banks used to close at 3 p.m. on weekdays?
It may be a sign of the times — many more mothers are working and unable to run
errands daily, and banks have broadened their horizon of offerings — but most
banks today are open until at least five o’clock on weekdays and have Saturday
hours.
At Milford Bank, drive-up windows are open from 8 a.m. to 8 p.m. weekdays.
That change "took off like a rocket," reports Edna Crego, Milford Bank’s vice
president and branch administrator. "A sole proprietor comes in and wants to do
his business at the window at 7:30 in the evening when he closes his business?
He can do that."
Banking has changed quite a bit since Crego joined Milford Bank. Thirty-four
years ago, it was called Milford Savings Bank, in part because it didn’t even
offer checking accounts. Today Milford Bank has four branches, all in Milford.
Crego says overall general banking has changed drastically in her tenure. Most
notably, there are many more services offered.
"We’ve got very sophisticated offerings," Crego says. "Between the Web office,
telephone transfers and ATMs, people can really do anything. They can walk in
the door, open the accounts they want, set up Web office for transferring, and
they never have to come into the bank again."
She acknowledges that new technology that keeps customers at a distance is a
double-edged sword.
"We do like to see our customers," she says. "Banking has become so automated
and so into the computer world, that’s what’s really changed a lot."
For better or worse, the "computer world" is here to stay.
Crego recalls that "Years ago the scare went, ‘Don’t get ATM machines — you’re
not going to have any tellers left."
In spite of the advances in technology, Crego has not noticed a slowdown in
service. Many customers still want to talk to people.
"In some banks, you can’t do that," she says. "Customers can come in, sit down
and talk to us or call us on the phone and that is important for being a
community bank and being service-oriented.
"Now we offer different services too — investment alternatives other than your
regular banking services, mortgages and loans and home equities," she adds. "I
don’t think there’s much we don’t offer here, and that has changed very much
for me since I first started here."
Then, Milford Bank was strictly a savings bank and regarded as something of a
little brother to bigger banks. "But we’ve grown into our own because we’re out
there competing with the big guys. Many people still like the service that a
small community bank offers."
Changes in banking accommodate the customers who wish to visit the branch and
those who prefer to bank from home.
"Some customers want to come in and sit down and talk with the tellers, or talk
on the phone to do their business while others are very happy with the
automation. They come in, use the ATM, do their thing on the phone or in Web
Office, and they’re very happy doing that because they’re busy. These are young
couples who are working and running children around and they want to go home at
night and pay their bills."
As far as competition goes, Crego believes there is less.
"We still have New Haven Savings and People’s Bank that we compete with, but it
depends what we’re competing for. There are bigger banks, but we certainly have
held our own.
We still very much have the customer at the forefront and trying to please them
and do all we can. That’s always been the concept here and one thing that
hasn’t changed. As much as we’ve grown with the technology, we’ve tried to keep
that part of it in mind."
People’s Bank’s head of commercial banking, James Macdonald, agrees with Crego
on the topic of technology: "Technology is with us to stay. That’s never going
to change, and that’s a good thing."
Macdonald started his banking career in 1979 as a teller at Berlin Savings
Bank. He went on to work at the old Connecticut National Bank in Hartford and
made his foray into business banking in 1985. In the late 1980s, he came to New
Haven and has never left.
In 1993, Macdonald left Shawmut Bank for Webster Bank, where he built the
Waterbury bank’s business banking initiative. About 18 months ago, Macdonald
joined People’s as regional manager for business banking in the New Haven area.
"When I came to New Haven, there were roughly a dozen banks," he recalls. "Now
there are about six banks."
Macdonald explains why the industry has changed so dramatically: "Publicly
traded banks strive to provide shareholders with competitive rates of return,
and so what they do is acquire competition in other banks, layer on revenues
and cut expenses."
He continues: "I think that becomes particularly acute in a soft economy. We’re
seeing so many bank acquisitions because the Connecticut bank market is heavily
banked. It’s not like it was in 1990, but we’re seeing a continued
consolidation as banks can’t grow their balance sheets without adding other
banks."
That, of course, is part of the logic now being employed by the management of
New Haven Savings Bank to justify its decision to convert to public stock
ownership in order to acquire the Savings Bank of Manchester and Tolland Bank.
In general, the person or entity who gets hurt is the business customer who has
ongoing and often critical banking needs and is subjected to turnover in new
loan officers and new people in the branch.
"A boss of mine in 1990 said, ‘We have too many banks chasing too few deals and
that’s why you had all sorts of banks going down the tubes because they made a
lot of crazy loans.’ What you have today, on a smaller scale and equally
competitive, is a lesser number of banks chasing still a lesser number of
deals," Macdonald says.
"What plays into the business now is that you have unregulated, non-bank
financial institutions such as GE Capital and GMAC and Merrill Lynch trying to
play in what has traditionally been a bank-serviced market," Macdonald says.
"They see an opportunity to put their money to work and earn above or very
competitive rates of return."
People’s Bank is a $14 million bank with the majority its assets in Connecticut
and calls its bread and butter the middle-market, or $5 million to $100 million
companies.
When Macdonald started out as a teller, he was typing loan agreements and
certificates of deposit by hand.
One thing that has changed is the speed of delivery.
"With technology, the documentation that might have taken two to three weeks
takes two days," he says. "When I came to New Haven, the bank didn’t have a fax
machine. I can’t imagine any more what those days must have been like. Let
alone when we got the plain-paper fax machine!"
Technology benefits customers as well as bank staff.
"As a customer of a bank, you want to know today, or as near as possible, how
soon you can expect your mortgage or your home-equity loan or your bank account
balance. You want to know with some level of immediacy, and that is what
technology has done for us," Macdonald says.
"My customers leave millions of dollars in a bank. They want to know that money
is working for them. They want to be able to go and check their company’s
balances."
On the flip side, there is depersonalization.
"While a lot of this tends to depersonalize some of what we do, I think that we
have done a nice job of putting enough cash-management professionals in the
field so they can put a face on the computer," says Macdonald. "We’ll go into
the field and teach people so they’re not afraid to use their computer. At the
end of the day, technology has really enhanced what we do in banking. We can
get information to a customer faster. We can service questions faster."
While Milford has its hand firmly on the title of that city’s hometown bank,
there are two such banks in New Haven — for the moment, anyway: New Haven
Savings Bank and the Bank of Southern Connecticut.
"That in itself is a major change from when I started in 1979," recalls Bank of
Southern Connecticut founder and CEO Joseph Ciaburri. "There were 15 hometown
banks — eight commercial and seven savings banks — and all we have left now are
international banks like Chase and Fleet or regional like People’s and
Webster."
The process of organizing a bank has also become more difficult. Twenty-five
years ago, three state and federal agencies were involved in the process, now
there are six.
In Ciaburri’s eyes, competition is not as keen these days because big banks
have less focus on the local area. "Then, 15 banks had the same focus. Now the
focus is so widespread."
In 1979, Ciaburri founded the Bank of New Haven (since purchased by Citizens
Bank). In the late 1980s, he started the Connecticut Bank of Commerce and in
October 2001, Ciaburri opened the doors of the Bank of Southern Connecticut — a
niche commercial bank targeted at small local businesses. One year later, the
first branch office was opened in Branford, and earlier this year, a second
branch opened on Whalley Avenue in New Haven. Ciaburri is in the process of
opening a new bank in New London called Bank of Southeastern Connecticut.
He’s spreading out, but keeping local.
The large banks, or "deposit gatherers," as Ciaburri calls them, "have money
going all over the world and that doesn’t help the local economy."
Ciaburri feels confident his bank business has filled a niche in the past two
years. "We have over 450 business [customers], so I’d say we have done our job,
and greater New Haven has reacted well."
Ciaburri says the landscape of banking in the New Haven area has changed
drastically, and more changes are expected with the recent dealings of New
Haven Savings Bank.
In the meantime, he’ll ride the changes, much like Macdonald, Ciaburri’s
competitor at People’s Bank.
Looking into his banker’s crystal ball, Macdonald observes: "Banks that are
successful do what’s worked for years and years: give good service and price
loans and products competitively. But when banks get into the higher-risk
venture-capital deals, they’re in a realm that they don’t understand."
Macdonald predicts that "There will be some innovations in terms of cash
management and technology-driven changes, but I don’t think there’s anything
that can replace me getting in my car and going to see someone who owns a
company, listening to them tell their story, telling me why they need to buy
the equipment, or why they need the line of credit. I don’t think there’s any
substitute for that."
"We put a face on the bank," Macdonald says. "That’s what will carry us into
the future. I don’t mean People’s, necessarily, but in banking, can I come up
with a sexier loan package? Sure. But at the end of the day, people need money
to buy their equipment, money to build buildings and employ people. And I tend
to think that those things are never going away."
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