Big bank executives move toward smaller banks
November 25, 2011
A new trend in banking has the makings of a movie script, a comedy with a light undertone of social commentary--perhaps a Tom Hanks vehicle.
American Banker recently reported that former executives from large banks are starting to find homes at smaller, more community-based institutions. It makes sense--with some megabanks actively cutting back, combined with a concerted government effort to shrink banks previously considered too big to fail, there should be both waves of executives cut adrift. And as smaller banks grow from the customer exodus from big banks, they need more talent to help them handle it.
The question is: Will this be a match made in heaven--or just a new type of hell for bank customers?
A happy ending for checking and savings accounts?
While seeing that most vilified of creatures, the megabank executive, finding his way into smaller community banks could seem like a cruel irony for anti-bank protesters, there are three reasons this particular movie script could have a happy ending:
- Retail banking wasn't the real problem at megabanks. The average bank customer cares more about rates on savings accounts and fees on checking accounts than the misdeeds that led to most bank failures. The two biggest sins of megabanks--predatory lending and excessive speculation--don't enter much into the typical retail banking relationship. Remove those temptations, and a big-time bank executive might do just fine in a smaller bank.
- Big bank executives have lived through some classic blunders. From disastrous financial decisions to spectacular PR gaffes, big bank executives have had plenty of opportunities to learn from their mistakes. Human beings are adaptive, so it is possible those executives could emerge from the experience more cautious and sensitive.
- Smaller organizations keep executives more responsive. The community banking environment reinforces a greater sensitivity to customers. Without the layers of organizational insulation that protect megabank executives from customers, those executives could become more understanding of those customers.
The bottom line is, this movie could end with the big-time bank executive finding happiness at a smaller bank--but only if the bank's customers are happy with the move as well.
