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In 2000, Stellar Strategic Group was founded to assist banks and credit unions acquire new checking customers with the goal of driving low-cost core deposits. Today, I feel somewhat conflicted given the market that exists 20 years later. For the bulk of the time we’ve been in business, we always followed the mantra that a consumer’s primary financial institution is considered to be where they have their checking account. While that may still be an acceptable way to look at things, what’s changed is the best and most profitable approach to securing that new customer.

Let’s explore why banks and credit unions exist. From a macro perspective, it’s fair to assume all institutions were established to serve the community in their charter footprint. It’s also fair to assume for the most part that’s what has happened. The question is, do we truly strive to help the individual consumer, or are most institutions driven by the bottom line? In fact, both can happen simultaneously. That brings me to what we believe is the best approach to growing your customer base. We firmly believe helping a consumer is far better than selling a product. It’s a mindset that rarely ends up in any strategic plan or budget line item.

The concept of customer service is a lost art. While technology enhancements are instrumental in staying competitive, aren’t we ultimately striving to have as little personal interaction as possible with our customers? Maybe that’s inevitable, but that first interaction with a new customer needs to be substantial if we expect the business relationship to be profitable and long-lasting.

Let’s consider this scenario. What if the first time you interact with a potential customer, you do something that virtually no other company has ever done for them? You save them money! You don’t sell them something, you improve their financial condition. Would that not be a great way to start a banking relationship? We think the answer to that is an astounding yes. For the moment, think about what you sell and how you sell it. How do you really differentiate your institution from the one across the street? That’s a hard thing to do because in reality you’re not that different from the competitor across the street and frankly consumers don’t much care anymore about the subtle difference you might bring to the table. What consumers really focus on these days are what can you do for me to make my life better.

Let’s explore a couple of options that are available today and as a result of the pandemic that have tremendous potential in driving new customers to
your institution.

Auto Loan Refinance Opportunity

First, there are some 3 million auto loans in this country where the consumer is grossly overpaying every month. In some cases, this translates to $6,000.00 over the term of their loan. Most of these consumers have no idea this is the case. They can be easily identified, and most would save well over $1,200.00 annually if their loan was refinanced.

Is it fair to assume this first interaction with a consumer may very well retain them for the long-term? Is it also fair to assume they might be pre-disposed to do additional business with you in the future? Of course, the answer to both questions is an unquestionable “yes”. Oh, by the way, the loan loss percentage on these consumers is well below the average of your auto loan portfolio and we are currently seeing on average an interest rate after refinancing in excess of 6%.

Student Loan Debt Opportunity

Secondly, the student loan debt opportunity is larger than that of auto loan refinancing by a ratio of 7 to 1. The overall student loan debt today is approximate 1.6 trillion dollars. Of that, a large percentage should be refinanced. With the average balance exceeding $36,000 and loan loss rates for those who have achieved an undergraduate or advanced degree extremely low. This presents a new opportunity for community banking institutions. The question is “who will take advantage of the opportunity?” Currently, the online banks have seized this opportunity and, based on loan volume, represent the top 10 institutions in the space. Again, this is a tremendous opportunity to help a new customer without having to aggressively sell them a product. This could be one of the greatest opportunities community institutions overlook in our lifetime. We constantly hear from clients and prospects, “what’s new?” Here’s one example of a new opportunity that at least warrants investigation by every community financial institution.

Market Disruption Opportunity

Finally, I ask myself every day why the community banking industry fails to take advantage of the level of market disruption that is taking place and showing no signs of slowing. With the combination of two major national bank mergers encompassing over a third of the nation, and a consistent flow of other mergers and acquisitions taking place, there has never been the opportunity to take significant retail market share from major competitors than exists today. In addition, major banks again have failed consumers on how they handled the PPP Program for small businesses. There are untold numbers of businesses large and small that have been underserved over the past 18 months. This is an opportunity that should not be overlooked.

Breaking News

As if what’s detailed in the previous paragraph doesn’t represent enough of an opportunity, Wells Fargo just announced they are ending all personal lines of credit. While this kind of decision is extremely rare, the effect it will have on its current customers can be very damaging to their credit. Those consumers that have existing lines, but are not fully exercised, will have their available credit reduced to the balance owed. All their members with a personal line of credit will see their FICO scores suffer. Several members of Congress have immediately responded to this issue based on how harmful this decision can be to consumers. Clearly, the market disruption that exists today is unprecedented. My question to all that are reading this article is, will you take advantage of this opportunity and accelerate your retail market share growth? Growing your customer base will never be easier!

Craig Simmers is the Founder of Stellar Strategic Group. Contact him at 410-990-0172 or

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