In the rush by many banks to increase profits, charge consumers with numerous fees, acquire other banks and investment companies, and target the poor with high-fee services, there are a few banks left that value their fiduciary relationship with their customers. The ABC Evening News interviewed an executive at one bank that still puts their customers first.
Reporter Chris Cuomo interviewed James C. Smith, president of Webster Bank, headquartered iin Waterbury, Connecticut. I found his bank's actions both sincere and truly customer focused. First, Webster Bank owns 75 percent of the home loans it signs. This means it maintains local responsibility, and minimizes shipping home loans to third party vendors. Second, Webster Bank modified about 65 percent of the loan modification applications, compared to about 33 percent nationwide.
These actions have several key benefits:
- It kept more people in their homes and paying down their mortgages,
- It helped keep those neighbors whole because foreclosed home drive down the values of surrounding neighborhood homes, and
- It is a clear, direct, measurable, and honest commitment which consumers can easily see
And, Webster Bank found a way to do this and remain profitable. At Webster Bank, its executives' bonuses are based on the number of loans modified, not foreclosed. Smith summed up well the bank's commitment:
"We have a responsibility to our customers to work with them. I think of it as being in our DNA. We're there to work with our clients, to help them through a very difficult time... We think the net cost to the bank of what would have been all of those foreclosures, by doing it the way we did, we've saved tens of millions of dollars. If you do the right thing it can help you grow, and you truly can do well by doing good..."
Executives at other banks should find this instructive, and direct their human resource departments to modify their internal compensation plans accordingly. Without customers, you won't have a bank.
Do you know of a bank that operates with a customer-focused commitment like Webster Bank? If so, share your experience below.