Kevin E. Flaherty – ‘Distinct Markets’

Connecticut and western Massachusetts have long shared resources and a Pennsylvania-based bank is recognizing that by carving out a specific market area dedicated to the region. The bank’s new model, which divides the New England region into separate market areas, aims to embrace the convenience of community banks, while offering the products and services of a large bank.

“The geography just made sense,” Christopher T. Phelan, regional manager of corporate banking, said. “They’re lumped together primarily because Springfield [Mass.] is probably 20 minutes from Hartford.”

The region has more in common than just geography.

The chambers of commerce from Springfield and Hartford have joined together to market the region as a whole.

Many companies in the region cross borders to do business and the area shares resources, like Hartford’s Bradley Airport, according to Steven M. Litchfield, regional manager of commercial banking.

“There is the state line, yet there is a lot of continuity,” Matthew R. Robison, Sovereign’s regional executive of community banking, said.

Both Connecticut and western Massachusetts tend to be “provincial,” according to Kevin E. Flaherty, market president for Connecticut and western Massachusetts.

“The unique thing is Â… first of all, Connecticut is a lot of distinct markets,” Flaherty said.

In order to get visibility across the state, banks have to advertise in many different newspapers and radio stations.

“You’ve got to cover a lot of ground,” Flaherty said. “It’s a difficult market to get visibility in.”

Banks must use similar tactics in western Massachusetts, Flaherty said.

“There are a lot of natural continuation patterns,” he said.

Aside from the geographical restructuring, Sovereign is restructuring its entire banking model. Flaherty said restructuring is the No. 1 objective for the bank.

“What we are doing here is somewhat revolutionary,” Flaherty said.

Flaherty pointed out that Bank One, part of the new JPMorgan Chase, employed a similar model, but it is fairly uncommon among other banks.

The new model links corporate, commercial and retail banking to encourage consumers to utilize more than one bank service.

For example, if a small-business owner has a commercial account or loans with the commercial division and wants to purchase a new house in Florida or open a retirement account, they could easily navigate between the different sectors of the bank, according to Flaherty.

That is a departure from some banks’ strategies. Flaherty said banks usually “silo” different divisions, often for good reason. The regulations for the different divisions can be complex and not understood by employees in each sector.

In past, if a banker referred a client to another division of the bank, there was the possibility of a bad experience taking the client away from the bank altogether. Flaherty said Sovereign got out of the habit of referrals.

But referrals or increased cooperation among the divisions can lead to more revenue, he said.

“We realized there’s a lot of revenue we’re not leaving on the table” by implementing the changes, Flaherty said.

Flaherty said he hopes the new model will allow Sovereign to offer a feeling of a community bank to its customers, while being able to offer products and services of a large bank.

“The idea is to compete with local community banks,” Flaherty said.

‘Local Decisions’

Under Sovereign’s new model, a chief executive officer or president will manage each market along with a market leadership team. These individuals will be responsible for all business growth in their area and will provide leadership to team members and the community.

In Connecticut and western Massachusetts, Litchfield, Phelan and Robison make up the leadership team.

Litchfield, who is in charge of commercial banking for the region, has been in the banking industry for 20 years. His new job, which started Jan. 1, will make him responsible for managing a team of employees who provide commercial loans, cash management and deposit services to Connecticut and western Massachusetts businesses.

Litchfield joined Sovereign Bank in 2000. Before working at Sovereign, he worked at Fleet Bank, BankBoston and Shawmut Bank.

Litchfield said he hopes to differentiate the bank’s commercial division from the competition with its strong product set, experienced people and smooth execution of bank business. Connecticut and western Massachusetts make up a competitive market, and bankers “have to do better than the next person,” he said.

The commercial division’s bankers work hard to spend time with business owners and match products to their specific needs, Litchfield said.

He said he also hopes for the division to become more visible. The bank is doing marketing blitzes and knocking on doors in an attempt to stay at the forefront of the business, he said.

Phelan oversees all corporate banking activities in Connecticut and western Massachusetts. Like Litchfield, he joined the bank in 2000. Before joining Sovereign, he worked at BankBoston. Phelan is a Waterbury native and has worked in lending, not-for-profit and middle-market banking for 20 years in the Connecticut market.

Phelan’s said his goals for the bank’s new model are to make sure Sovereign is a viable alternative to competitors, like Connecticut banks Webster Bank and People’s Bank.

“We have numerous competitors,” Phelan said.

The Connecticut corporate market is split between large, national or international businesses like insurance companies and smaller businesses that are often served by local savings and loans or mid-sized banks like NewAlliance, Phelan said. His aim for Sovereign is to allow the bank to serve all those businesses. The corporate division’s motto is “to out-national the nationals and out-local the locals,” Phelan said.

The restructuring allows corporate bankers to make more local decisions, cutting out some red tape customers sometimes find with big banks.

“We really are making local decisions,” he said.

He emphasized the cooperation the new model brings to corporate, commercial and retail banking.

The bank started laying out its new structure a year and a half ago, according to Phelan. The new model encourages bankers from the corporate division to visit branches, find out how they can help retail bankers and teach retail bankers how they can help the corporate division, according to Phelan.

Robison is executive vice president and oversees community banking in the region. He manages the 40 branches throughout the Connecticut and western Massachusetts area. After working as regional manager of BankBoston’s branches in Connecticut and Rhode Island, Robison joined Sovereign Bank in 2000. Robison has been in banking for 25 years and was with Sovereign for its entry into the New England marketplace.

Robison’s said his goals include loan, deposit and fee-income growth. Maintaining relationships and creating new ones is also important to Robison.

“[We want] to deepen the relationships with customers we have today,” Robison said.

Robison said the bank wants customers to have six or more services within each household.

Robison is also striving to become more involved in the western Massachusetts and Connecticut communities that the bank serves.

In order to maintain a feeling of a community bank, Robison said Sovereign has created eight sub-areas within its Connecticut and western Massachusetts division. Area managers will be assigned to these branch clusters throughout the region.

“That is one of our first priorities,” Robison said.

He said he expects this model to be up and running in the next few weeks. Robison said the move will facilitate the bank’s move toward empowering local decision and allow it to move from a regional focus to one focused on smaller geographic areas.