The Wells Fargo Alternative

Tony’s last post highlighted (or lowlighted) the Wells Fargo outage earlier this week. The outage points out a real problem with mega-banks…the farther you get from the point of control, the worse your chances of quick recovery after a problem. When Wells went down, their electronic systems failed and all the branches were totally down. Why? Because there is no way that you can give 5,000 branch managers any sort of authority to disburse funds on their say so.Now, take a look at a typical community bank. We have about 50 community bank clients. Virtually ALL of them have a contingency plan for Business Continuity in the event of a total computer/Internet failure. They can use printouts, manual systems and good old common sense to operate for a day or two until electronic normalcy is restored.Why? Because community banks know their customers, trust their employees and have management that, for the most part, has an ownership interest in the bank. This translates to more flexible customer service.I was chairman of the advisory board of a community bank that got bought by a national bank. It turned out that our tellers had more authority then their branch manager! After 13 months, not one employee remained. As a result, many of the key clients left for another community bank. Remember, when you choose a bank, having 10,000 ATMs is nice, but there are other, far more important issues, like flexibility, customer service and relationship. After all, how often do you really need to get cash outside your neighborhood these days?