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How Big A Fee-fdom For Community Banks?

Posted By Vincent Valvo, CEO at Agility Resources Group, Friday, February 10, 2012
Updated: Tuesday, November 19, 2013

Are New England's community banks missing the boat when it comes to fee income? Or are they setting the standard for the rest of the nation's hometown institutions?

Fee income is one of those lightning rod issues for banks. As the pool of qualified loan borrowers (i.e., those that actually have some reasonable likelihood of re-paying their loan) has shrunk, banks have had to look at other sources of revenue to maintain profitability and keep on the right side of regulators.

The holy grail of found money for banks is in fees. The airline industry has pretty much written the bible on making everything a fee, and finding creative ways to dream up new fees. Banks have simply become apostles of the faith. But, as with any group of worshipers, some are more fervent than others.

The largest banks have been the most vocal, and most ardent, in putting up new fees. There are checking account-opening fees, overdraft fees, monthly maintenance fees and so many more. The public often quietly puts up with these little acts of extortion, all while seething through gritted teeth. The big banks get away with the fees because consumers have been beguiled by massive marketing campaigns, and because they like the convenience of the big banks' networks. Plus, once a bank has a customer, that depositor is unlikely to change institutions without provocation. Getting new checks and changing online account information is just such a hassle…

But consumers every now and then show a little mettle, especially when a fee just seems a tad too egregious. The latest and most telling example was Bank of America's ill-fated decision to start charging people for their debit cards. Consumers howled, network news anchors made great sport of the clash, and BofA backed down.

Community bankers around here will tell you they not only wouldn't have made such a blunder, but that they distinguish themselves from big banks by shying away from so many fees.

And the data bears them out.

Basis Bias

For the past five years, non-interest income as a percentage of total assets at New England banks with less than $1 billion in assets was running about 15-20 percent below that of local banks with between $1 billion and $5 billion in assets, according to an analysis by bank advisory firm Ostrowski & Co.

But should our community bankers be proud of the fact that they didn't load consumers up with additional fees, or should they be chastised for leaving money on the table?

Although being granted a banking charter brings with it an obligation to community reinvestment, a bank isn't a social services agency. Its primary mission is to make profits. While New England community banks have been averaging non-interest income/assets ratios around 70 basis points, their counterparts in the rest of the country were consistently coming in around 10 basis points higher. Community bankers in Idaho, it seems, had no trouble sticking the local farmers with a few more fees.

If financial pundits were making the call a couple of years ago, they would have said bankers in the Bay State weren't maximizing their fee revenue. But as we've moved through the economic recession, a different picture has emerged.

For banks under $1 billion nationally, non-interest fee income has been a declining revenue stream. Although the percentages were higher than what New England bankers got, the national ratio has been in an unstable decline. From about 80 basis points in 2006 and 2007, the national benchmark slid to 72 basis points in 2009, and has only moved slightly since then.

While the national average was 80 basis points, New England's was substantially lower, at 56 and 61 in those two years. It hit a local low in 2009– the height of the economic collapse– at 45 basis points. But it's since risen significantly, to 72 basis points in 2010 and 78 in 2011. Coincidentally, those are the same averages that community banks nationally sported in those two years. So it looks like New England bankers' strategies have been growing fee income in a difficult period (without overburdening their customers), while their counterparts across the country have been coming to the conclusion that maybe New England has the right mix, after all.

If that's true, though, heaven help the customers of big banks. While the 2011 fee income national average for banks over $5 billion is 132 basis points, it's 216 for New England-based banks of a similar size. They may not be charging debit card fees, but they're making up for it in a lot of other hidden charges.

Tags:  fees 

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Facebook Contests: How to Win at Your Own Game

Posted By Carie Schelfhaudt, Mcdougall & Duval, Saturday, February 4, 2012
Updated: Tuesday, November 19, 2013

If you love running contests on Facebook, listen up! You may be losing at your own game. It's alarming to discover the number of financial institutions that are violating Facebook contest rules and regulations in an industry where compliance risks have historically been of the utmost concern.

So, gather a list of your most recent contests and see if they sound similar to the violations below. You could be at risk of losing your page... and your valuable fan base!

Violation #1 Example: Like us to be entered to win ABC!

The simple act of liking a Facebook page cannot automatically enter fans into a contest or drawing. This is against the Facebook rule that states, "You must not use Facebook features or functionality as a promotion's registration or entry mechanism."

However, if you are running a contest on your Facebook page, you can require that customers Like your page as a prerequisite for entering a contest. This process, called fangating, means that fans will see one graphic before they click the Like button, and a second graphic to enter the contest only after they've clicked the Like button. Therefore, fans cannot enter into the contest until they have liked your page. The new Like does not automatically enter the person into the contest, but keeps the contest limited to Facebook fans only. This will help increase your fan count without violating Facebook rules.

Violation #2 Example: Comment on this wall post to be entered to win. Or, upload your photo to enter and the photo with the most likes will win ABC.

Similar to the rule that you cannot use the Like button on your Facebook page to enter fans into a contest, you also cannot use the comment box or the Like button on wall posts as entry or voting mechanisms for a promotion. Facebook rules strictly forbid running contests on the Facebook wall, and that includes entering, commenting, liking or uploading as ways to administer contests. These are all considered Facebook features and functionality.

The best alternative is to direct your fans to a Custom Contest Tab to enter into a contest administered by a third-party app. There are many of these apps on the market today. For a small premium, you can create a contest that is compliant with Facebook's Promotional Guidelines.

Violation #3 Example: Allison Davis, you are our winner! Look in your Facebook Messages to redeem your prize!

According to Facebook, you cannot notify winners through Facebook, such as through Facebook messages, chat, or posts on profiles (timelines) or pages. This does not mean that you can't tell your fans who won the contest. It simply means that you have to find an alternative way to notify the winner and award the prize, such as via email or phone. A custom notification tool is a standard feature with most third-party apps. Alternatively, you could host your contest on your website and direct fans to a custom URL to enter the contest.

But everyone's doing it, you say? Facebook certainly does not go out of their way to inform page owners of their contest guidelines, but they are out there, and not following them could put your page at risk for deletion.

If you're worried about teetering on the line of what is appropriate and what is not, be sure to read the complete list ofFacebook's Promotions Guidelines. And remember, Facebook contests, promotions and sweepstakes must include the following:

1. A complete release of Facebook by each entrant or participant.
2. Acknowledgment that the promotion is in no way sponsored, endorsed or administered by, or associated with, Facebook.
3. Disclosure that the participant is providing information to [disclose recipient(s) of information] and not to Facebook.

Continue the conversation online feel free to email me directly at with any questions or comments.

Tags:  contests  facebook  social media 

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Ten Ways to Discuss Mystery Shopping Reports with Employees

Posted By Judi Hess, Friday, January 6, 2012
Updated: Tuesday, November 19, 2013

1. In person, one on one: One of the best ways to gain impact from mystery shops is to meet with employees one-on-one to discuss results. If an employee does not score well on a shop, managers need to coach the employee privately. They can discuss ways to improve the customer interaction and also the employee's concerns with any of the mystery shop expectations.

2. Email: Companies send summary emails about regional and company performance within each mystery shopping area to keep everyone on the right track. Highlighting the high-scoring areas compliments employees, while detailing often-missed sections lets employees know where to place more effort.

3. Staff meetings: Whether at the unit, regional, or district level, staff meetings provide good opportunities to discuss mystery shop outcomes and improvement strategies for the more difficult areas of the mystery shop. For example, if many associates struggle with a closing question, use a staff meeting to brainstorm ideas about asking for the business. If some employees hesitate to refer customers to other departments, dig deeper into the reasons to develop process improvements.

4.Internal Campaign Meetings: A good way to link mystery shopping results into a positive meeting setting is to include shop performance in unit and district competitions. Many employees will not admit it, but they like recognition within the workplace. Providing individual, location or unit comparisons on mystery shopping performance – and linking it to reward or recognition – engages associates in the meeting and improves performance across the board.

5. Interviews: Managers should inform job candidates up front about detailed job requirements, including the company's mystery shopping expectations. The more potential employees know about standards for phone answering, customer service expectations, sales goals and referrals, the better prepared they will be to contribute to the company's bottom line.

6. New associate training: New employee training should include an explanation of the mystery shop process, on the spot rewards if applicable, and examples of a mystery shop result report. One of the advantages of a mystery shop program is that the mystery shop survey serves as a written expectation of employee/customer interactions. Share the survey with the new employee from the start so that the employee gets off the ground running.

7. New manager training: Whether your company uses onsite mystery shopping, telephone mystery shopping or video mystery shopping, new managers need to know what to expect from mystery shops at their locations. They also need to know how often shops will take place and how to use information for training and motivating their employees. Mystery shoppers may also assess managers, and their behaviors with customers should mirror mystery shop expectations. If the company uses competitive intelligence, new managers should be brought up to speed on how well their company stacks up to the competition.

8. Ongoing Training sessions: Because mystery shops reflect revenue-producing company standards, training departments include mystery shop surveys, expectations and examples of well-done mystery shops as part of the ongoing training agenda. If your company is not already including these topics consistently, add them to ensure that you gain the most from your shops and your training program.

9. Training videos and web-based training: Companies include mystery shopping information, tips and program details in training videos and online training for employees, so that the information is always available.

10. Role play: Groups may use mystery shopping results as a focus for informal training, including role plays. Role plays may hone in on phone and face-to-face skills. This works well for branch or location-specific training, because the individual location can tailor role plays to improvement areas for their specific team. They can also choose role play scenarios based on how seasoned their associates are.

Tags:  market reseacrh  mystery shop 

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5 Steps to Managing Privacy on Facebook

Posted By Carie Schelfhaudt, McDougal & Duval, Monday, July 11, 2011
Updated: Tuesday, November 19, 2013

The social media revolution exists at the intersection of our personal and professional lives. Being socially immersed in the online world creates challenging boundary issues for workers whose jobs require them to be present in online communities, but hesitate to have their personal lives revealed with coworkers on the Internet. Blurring the lines between our working and personal lives could have negative ramifications if not treated with care. Choreographing a unique dance around the line between your work and personal lives will help to extinguish any concerns as we nudge into this new medium of communication.

Your Facebook friends are likely a carefully compiled mix of friends, family, coworkers and acquaintances. Because of this, the content you generate on Facebook may not be appropriate for all of your friend circles. For instance, you may not want to share photos from your high school reunion with the CEO of your company. If you've hesitated recently about hitting the accept button on certain friend requests, you may want to consider increasing your privacy settings.

Google+ (Google's "answer" to Facebook) has recognized privacy as a huge issue for adults in the working world and has created drag-and-drop friend circles to allow you to only share certain content within each friend circle. This feature allows you to have a diverse range of friends and simultaneously protects you from over-exposing your private life. However, what many consumers don't realize is that you can categorize your friends just as easily on Facebook. Here's how:

  1. Start by taking a good look at your current friends and those who want to be friends with you. Online and offline, we know people in different contexts and share information with them in that context, and sometimes that context alone. Have you not accepted certain friend requests? And for what reason? When you take a good hard look at your friends, you will realize the diverse mix of friends, family, coworkers and acquaintances, yet they all see the same information on your profile. Think about ways to group your friends based on the content that you are wanting or willing to share with them. If you really don't want every single one of your friends to be updated with photos of your anniversary barbeque or you think Aunt Helen will flinch if you post an edgy blog entry, creating friend lists will help you mind the gap between friend circles.
  2. Analyze the type of content you share with your online community. Do you often share pictures or videos that are appropriate for all parties? Start looking at your content from the perspective of your friends; through their eyes. Really try to understand why they friended you in the first place. Not only will your friends appreciate the gesture, but you will have the added benefit of protection from friends that you don't know as well as others.
  3. Start building simple friend lists. Choose friend lists/categories that are easy to remember. Don't get bogged down with too many lists because it will be hard to remember the privacy settings for each list. Two or three lists are usually sufficient. To access your Friend Lists from your Facebook homepage, click on "Friends," then "Manage Friend List." From here you can create a new list and add friends to that list. Once created, Friend Lists will be displayed in the left-hand navigation for adding or deleting friends. By default you will see a list of friends not currently on a list.
  4. To change the permissions for a friend list, click on "Account," then "Privacy Settings." From here you can click "Customize Settings" to see a list of the different content that is available for your friends and networks to see on Facebook. Selecting the "Customize" option from the dropdown menu for each area of sharable content will allow you to manually type in a list of friends that you would like to hide from seeing the respective content.
  5. Privacy settings change. Many times, they change with little to no notification. Be smart about the content you put on the web and be sure to check your work. Periodically view your page as others would to make sure that the security settings are still in place.

Continue the conversation online feel free to email me directly atcschelfhaudt@mcdougallduval.comwith any questions or comments.

Tags:  facebook  privacy  social media 

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Identifying an over-looked and vital social media component

Posted By Adam Cupples Digital Marketing Officer, HarborOne Credit Union, Monday, July 4, 2011
Updated: Tuesday, November 19, 2013

Move over "Location, Location," here comes CONTENT, CONTENT, CONTENT!

On June 24th, I attended the Social E conference held by Banker and Tradesman at the Hyatt Regency Newport in Newport, RI. I was invited to sit on a panel full of smart, talented, and informative men and women, oh, and me. There were some great takeaways from the sessions, but one thing was lacking... don't get me wrong, everyone was great, especially the "Socialist Bankers" panel, (ahem), and I think everyone left well-informed and pleased.

Sessions included some web basics: Blogging, Facebooking, Tweeting and broader challenges facing some financial institutions: merging traditional media with digital, inbound marketing and more. Still, I couldn't help noticing that something was being overlooked.

It was encouraging to hear that many financial institutions have active Social Media Policies in place. Teams are creating and thinking about social networking sites, blogging, and the effects on their Financial Institution. They also shared concerns and fears of tracking the return on investment, time management, and the dreaded, and sometimes unavoidable, negative comment.

The one, most important word for social media discussions, the one little word that I didn't hear often enough was content. Content should appear in every other sentence and should be echoing in your heads: content, CONTENT,
C O N T E N T!

Take a step back and think, why do you "Like", "Follow", subscribe to a blog or e-newsletter? What do you think when you find out quickly that they've (companies) set up accounts because someone told them to, without realizing how to use it well? Posts shouldn't be obligatory, but engaging. I think with social media/digital marketing it's not so much about getting your name or logo in someone's news feed as it is really offering something of interest.

If you provide content that is engaging, educational, etc... the people, comments, interaction, and a magical relationship will follow. Okay, maybe not magical, but you get my point. Not in the magical,Field of Dreams way., "If you post it, they will come" but in a realistic way. Find out and research your audience to see what engages them and what they want to hear. One piece of advice is to develop what I like to call a "Conversation Calendar". Developing a calendar of posts, articles etc. will keep you on track, without worrying about coming into the office everyday, logging on to your Facebook account and saying to yourself "What will I talk about today?" Having the calendar will keep you focused on your Financial Institution's goal of why you launched into the Digital Marketing era.

Tags:  content  social media 

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