A Q-C banking dichotomy: Big, little will survive

Photo/Gary Krambeck Banks inside grocery stores are an increasing common sight in the Quad-Cities. Here, a customer visits the First Midwest Bank branch in an Eagle Country Market.

As the banking business continues its march towards automation, the independent bankers are counting on attracting more customers with the personal touch.

The growth in the banking industry over the past few years has been through 24-hour banking, Internet access and Web-site marketing, according to local bankers.

Last month, federal thrift regulators also opened the door to E-Trade Group's $1 billion purchase of online banking services, which is expected to create the largest Internet financial services business in the industry.

Such electronic banking is what computer-savvy customers are demanding, local bankers said. There likely will be more innovations in the industry under the bank modernization laws passed by Congress last year which removed barriers between the banking, insurance and brokerage house industries.

But banking without walls is not the final picture, Quad-Cities area bankers said. The banking business still is focused on buying and selling money. What's changing is the way banks deliver money to people, said Steve Dale, spokesman for Firstar Bank of Milwaukee.

``Banking is not a real complicated business,'' Mr. Dale said. ``It's all about loaning money, safeguarding your money and paying interest.''

Customers who want to track their balance and deposit their paychecks or pay their bills from their personal computer can do that, Mr. Dale said. Those who want to talk to a teller or visit a personal banker will be able to receive those services too, he said.

``It's good, ol' fashion banking, like you roll up your sleeves,'' he said. ``If we start banking too much, we're going to lose the edge.''

The banking industry already has begun its transformation, said Gerard Huiskamp, president of Black Hawk State Bank in Milan.

``I think that banking is headed toward a dichotomy,'' he said. ``On the one side are those customers wanting touch-and-feel services and there'll always be a place for that -- local services with a smile -- and they'll pay a little price for that.''

The other end of the spectrum is driven by high technology, he said, where the customer is looking for the lowest interest rate on their loans and the highest interest rate paid on their deposits, and they are not necessarily concerned about where the bank is located, he said.

These customers are likely to have a brokerage checking account with one of the major firms offering higher interest rates on their deposits, he said.

The rest of the public falls somewhere in between, and they are the customers the independent, community banks are fighting over, he said. The independents are going to offer a higher level of service and a higher quality of service, he said.

The mega-banks' ability to offer more high-tech services and competitive interest rates are having a profound impact on community banking, said president Gary Andersen of Metrobank in East Moline.

The community bank has to offer the high-tech services, while offering higher quality personal service and expertise to its customers, he said.

He predicts the mid-sized, regional banks in the middle will disappear, while the smaller, community banks will continue to grow. The strength of the community bank comes from its staff of local people and its relationship with its customers, he said.

Officers of American Bank & Trust Co. of Rock Island reviewed the trends in the industry when planning its expansion into the Iowa Quad-Cities, said Harry S. Coin, president and chief executive officer.

American Bank renovated its existing branches within the last three years and began building its first bank in Iowa, scheduled to open in April or May. The new bank is full service.

``Service is key,'' Mr. Coin said. ``Not only do we look more modern, but we have our core facility, too. We'll be able to offer the products the bigger banks have with personnel from the local community.''

The banks of the future already look more like professional offices. They have fewer tellers and more customer service representatives, or personal bankers, to answer customers' questions.

The 30-second or one-minute transactions are more likely done electronically -- cash from an ATM or telephone transfer and bills paid with a debit card.

The ultimate change will see more banks in supermarkets and shopping malls, wherever customers want the convenience of banking services with more flexible hours.