As a community banker, I am always really annoyed when I read that a big bank has once again done something to hurt customers. Because it seems like that happens all too often.
The big banks will say their fiduciary duty is to shareholders. Which is true. But it’s hard to see how shareholders benefit from policies that often infuriate customers. If it were only that, it’d be bad enough. But when what a big bank is doing is so “unfair and deceptive” that Federal regulators have to step in, that can’t be good for shareholders.
A very recent example: This past August, according to numerous news sources, Citizens Bank was ordered to return $14 million to customers and pay a $20.5 million fine for one of the most unbelievable stunts any banker I know has ever heard of.
Apparently, if the total a customer noted on their deposit slip was less than the actual amount they deposited by less than $50 dollars, Citizens credited the wrong, lower amount to the customer’s account and kept the difference.
Unbelievably, they did that for 5 years.
A whistleblower’s report brought in the Consumer Financial Protection Bureau (CFPB), the Federal Deposit Insurance Corporation (FDIC) and the Treasury Department’s Office of the Comptroller of the Currency. They discovered the whistleblower was telling the truth.
Consumer Financial Protection Bureau President Richard Cordray said that Citizens’ “shoddy practices deprived consumers of money that was rightfully theirs. They violated the basic tenet of what it meant to offer a deposit account – to keep the customer’s funds safe – and imbued a deep sense of mistrust.”
It’s hard to see how the thinking at Citizens got so convoluted that anyone there could think for even one minute that shorting their customers was anything but a horrible, completely unacceptable idea.
Because there’s a place in the market for big, publicly-held businesses. There’s a place for big, publicly-held banks. Absolutely.
But the reality is that, for the most part, big banks don’t see local people with regular accounts – checking, mortgages, Certificates, savings – as their most important customers. Because they’re not. The focus at big banks is on big deals.
Which is why there will always be a place for well-run local businesses. And, I believe, for well-run local banks. Local banks are different from big banks.
At an independent local community bank, you are an important customer. Even if your account is a small one. Local banks get to know their customers as people. And, even better, at a local bank you can get to know the people who work there.
Decisions are made more quickly at a local bank, and local banks are much less likely to impose “one size fits all” on customers. Local banks don’t have to do that and they don’t want to.
Technology has truly levelled the playing field. Today local banks can – and do! – offer the same services big banks do, usually at a better price or rate.
The story is told of how Abraham Lincoln would walk miles, back and forth, to return a few pennies if he short-changed a customer. He did that because he knew the person he owed it to. Because he knew they knew him. And because it was their money!
Every customer deserves to be treated honesty and fairly. That’s the spirit at local community banks.
Nick Maffeo is the President & CEO of Canton Co-operative Bank in Canton. “Smart About Money” is a regular column he writes for the Canton Citizen. Have a financial question you’d like to ask? Email to info@cantoncoopbank.com.