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Select strategic relationships are helping these banks stay competitive
When it comes to innovation, the newest things can be found in the most familiar places. As community banks have striven to innovate amidst the industry's challenges, they have found a friend in partnerships. Specialized third-party service companies know that customer service is what community banks do best. These companies have figured out how to meet the needs of community banks and, in a partnership with them, provide bank customers with the products they want. The result is a marriage of the face-to-face customer service of a community bank with the competitive product of its partner company.
Cost is always a concern. Cost puts a cap on the availability of new technology-based products and on marketing budgets. Pioneer Bank of Mapleton, Minn., appreciated this after it opened a new branch in the Mankato market in 2004. Like most community banks, Pioneer has never needed to spend large sums on marketing; its marketing was its reputation and its face to face relationships with its customers. "Our roots are in agriculture," said David Krause, president of the $270 million bank. "We are not a bank that does a lot of advertizing because we have branches full of community bankers who coach your kids in baseball and sit next to you at church."
The Mankato market brought a new challenge for Pioneer: With nearly 50,000 residents, the area has 17 other banking institutions with 33 branches. Wells Fargo has four locations in the area. "Wells Fargo really dominated the market; they look established, that's their advantage," Krause said. Other community banks also were trying to come into the market. It's hard to sell the friendly, hometown banker message with so many others saying the same thing, he added.
BancVue's Kasasa line
After a challenging six years, Pioneer partnered with BancVue, a banking innovation company that offers community banks a sizeable menu of competitive account products. BancVue wants community banks to have a brand of checking and savings account products that rivals those of larger banks. "The idea is to provide consumers the products of a large bank with the service of a community bank," said Gabe Krajicek, BancVue's president.
When a bank partners wjth BancVue, the bank...