According to today’s Wall Street Journal, “Banks” are getting back to the people business. The funny thing is that when they say “Banks” they mean the biggest banks in the country. According to the Journal, “deep customer relationships were the bedrock of the U.S. banking industry, especially at small financial institutions. That ended at many regional and big banks with the rise of computer-driven credit scoring models…” The Journal goes on to say that, after a few rough years, those same big banks are trying to go back to the model that has worked so well for community banks–know your customer, and look at credit AND character. Good community banks never stopped using this model.
Community banking works because we’re a typically a conservative bunch of businesspeople. We have high standards but we’re not beholden to a business model that throws out the good clients with the bad. So we look for business owners that know what they’re doing and that also have strong character. Our customers know us and we know them. Ideally, it creates an accountability on the part of both the lender and the borrower because we are working with people we know in communitites we want to see grow. Poor decisions hurt us and the community at large.
So, go see a good community banker if you want to work with someone who cares about you and your business, knows the communities you know, and wants you to succeed.