What the Future Holds, Post Crisis: Once the Smoke Clears, Some Familiar Patterns Should Re-Emerge-Some Favorable, Some Not-As the Industry Takes Its First Steps into the Future. Five Bankers Offer Their Views

[ILLUSTRATION OMITTED] When the bankers gathered in a windowless meeting room early one summer morning to talk over the future of banking as they saw it, it's fair to say none of them, nor this writer, foresaw the financial market free-fall that was to occur beginning after Labor Day. They did, of course, recognize that the times were perilous. But the focus of their comments was on the fundamental business of banking and where it was heading--a challenging enough scenario at any time. And when the smoke clears from the conflagration in the money markets business will go on for the vast majority of banks and savings institutions--not exactly "as usual," perhaps, but not totally changed either. At the macro level, the financial infrastructure may have been turned on its head, but in banking markets around the country many of the long-range, underlying trends continue. It is to these trends that the five bankers spoke. The participants are identified to the right. They represent a good cross-section of the industry. Only the very largest bank segment was not represented. Taken together, the comments present a composite of the industry's strengths, challenges, and opportunities. Small business at the core Under the heading of strengths that banks individually and collectively possess, the first to be mentioned was the small business market, where, all agreed, banks should continue to do well. Said Richard Anthony (Synovus Corp.): "The small business middle market is where relationships really mean a lot, and banks have an opportunity to become trusted advisors to privately held, locally owned businesses. We see that as our top competitive advantage. But in order to play that role, you have to have a high level of responsiveness, and have granted a certain amount of empowerment at the local level. " Adding to that, Stephen Gurgovits (FNB Corp.) said, "We offer--and will keep offering--a full array of retail products, but most of them are commoditized. What we really focus on as a core competency is small business lending--simply because it is not commoditized. Every deal is different, every business has different situations, different circumstances. " Offering a somewhat different view, Guy Williams (Gulf Coast Bank & Trust) agreed that the small business segment is very important, but he feels "the bank charter doesn't give you an advantage on the lending side. It gives you an advantage on the funding side, because of deposit insurance, and on the payment system side. The price we pay for that is an incredible burden of regulation. " Williams feels that regulation hinders banks' ability to be flexible and responsive--in lending particularly. Service trumps rate Another key differentiator identified by the group is superior customer service. For the community banks present this was a critical difference, enabling them to compete with a host of larger bank and non-bank competitors. (There was some good-natured ribbing of the larger banks at the table by the community banks, because of the fact that the former referred to themselves as "community banks.") Warren Luke (Hawaii National Bank) offered these analogies for how quality service trumps rate: "Why do people stay at a Ritz Carlton versus a Holiday Inn? Because they have certain expectations. And when you go to a top restaurant, you don't say, 'Wow, your prices are too high. If you don't lower them I'm going to eat across the street. ' You have to differentiate yourself, in other words, and give what the people expect. " A closely related point--good people--is both a strength and a challenge. The advantage is fairly obvious. Said Gurgovits: "A difference in our bank, versus competitors, is with the people that we employ, and their passion for customer service. I hire for attitude and train for skills. That's critical. …