Changes yet to come

Their signs are up and they’re all over television and the radio, but North Carolina-based Bank of America’s full impact on the New England marketplace isn’t being felt yet. Community banks and credit unions are bracing for the impending competition by implementing new marketing strategies.

BofA has been ubiquitous in the headlines recently after a report in The Boston Globe said the bank’s Massachusetts layoffs reached 1,400, twice the number of layoffs the bank previously disclosed. In Connecticut, state Attorney General Richard Blumenthal chastised the bank in February after it lost data tapes containing account information for 1.2 million people.

But the publicity hasn’t had much of a negative effect on the bank. There is always local backlash when jobs are lost, but BofA’s commitment to reestablish those jobs over a period of time has saved it from losing credibility, according to Joe Morford, a California-based analyst for RBC Capital Markets.

In Connecticut, banks have been aggressively competing for deposits, according to Deborah Bochain, executive vice president of personal financial services at Middletown-based Liberty Bank. Consolidation within the market has led to more competitiveness over loan and deposit rates, and banks are changing them more quickly to keep up.

“[It’s] just a much more aggressive environment regarding rates,” said Patricia Jatkevicius, Liberty’s director of marketing.

But executives at Liberty Bank haven’t noticed BofA becoming a big part of that yet.

“BofA doesn’t seem to have entered the fray yet,” Jatkevicius said. “I’m sure it’s going to come in here like a tornado.”

A Case of ‘Hiccups’

Although Bank of America has made its presence known in Massachusetts, banks say they aren’t being hurt by the competition. Instead, they are reaping the benefits.

“We’ve definitely seen a pickup in accounts,” said Christopher Bramley, president of Banknorth Massachusetts, adding that the bank has seen the most activity in the commercial banking side.

On Boston’s South Shore, Scituate Federal Savings Bank also has had more new customers coming through the door.

“We do see people coming into the bank,” said Thomas Quinn, senior vice president at Scituate.

Quinn noted that mistakes can occur during a bank’s computer conversion. Although BofA’s has not occurred yet, he said, customers tend to get nervous about account errors.

“It creates awareness that there is an alternative in the marketplace,” Quinn said.

But while BofA hasn’t undergone that conversion yet, it has been dealing with the integration of Fleet’s systems into its own.

The bank is likely still in the “food and shelter” part of its development, Bochain said. The bank, which acquired FleetBoston Financial Corp. early last year, is probably paying more attention to the details of conversion than to marketing.

“They really seem to be going through their acquisition transition,” Bochain said.

But BofA officials already have some idea of where they want to grow in Massachusetts and Connecticut.

“Clearly, from a goal perspective, we want to sustain our No. 1 market position,” said spokeswoman Alex Liftman.

The bank also has some areas it will target for expansion. The bank is the top SBA lender in the country and the top SBA lender to minorities. It wants to echo that statistic in Connecticut and Massachusetts, Liftman said.

BofA is also concentrating on a fast-growing segment of the population that is affluent, but not very rich. The bank has a Premier Banking Department that caters to customers who have between $100,000 and $3 million in deposits. Those customers get a dedicated banker and other financial services, Liftman said.

BofA’s upcoming computer conversion – which will be in June for Massachusetts and July for Connecticut – could cause some “hiccups” for the bank, according to Morford. The computer conversions associated with acquisitions often result in problems such as lost statements, giving competing banks an edge on luring in unsatisfied customers.

So far, BofA’s acquisition of Fleet hasn’t resulted in any major problems, Morford said.

“At the customer level, it seems to be going fairly smoothly,” he said.

John Carusone, president of the Hartford-based Bank Analysis Center, said he has noticed the same thing; while he has heard some complaints about long lines at BofA branches, customers overall seem satisfied.

“The integration seems to have been executed very well,” he said.

Bank of America is also bringing some new trends to New England, causing many bank managers to discuss customer service issues.

“There’s quite a bit of buzz in the industry about how much more of a retail competitor BofA is than Fleet,” Carusone said. “Nonewithstanding their size … they’re very nimble in their marketing.”

Bank managers all over New England have their antennas up, Carusone added.

The bank’s customer service model is a step up from Fleet’s, Morford agreed.

One trend the bank is known for is its use of greeters in its lobbies. Greeters are there to direct customers who walk through the doors, and those employees can even perform some transactions themselves, according to Liftman. Customers like the greeters, she said.

One Connecticut credit union liked the idea so much it is now using greeters, or “concierges,” in some branches. Charter Oak Federal Credit Union in Groton made that “change in structure” at its branches last December, according to Rick Stout, a senior vice president at Charter Oak. The concierges work in a similar way to BofA’s greeters. They meet individuals at the door and direct them to where they need to go. The credit union’s four concierges are people who have worked in the credit union for years and can answer many members’ questions, Stout said, adding that he recently met with the concierges and found they were all happy in the position and impressed at the impact they have on the branches.

Charter Oak’s customers have responded positively to the change, he noted.

“It’s certainly been well received,” Stout said.

Charter Oak started the concierge position because it seemed like a good way to improve customer service, but also to meet new and existing competition in the area.

“We did that because we knew Bank of America has individuals who work in that capacity of a greeter,” Stout said. “We have a lot of good competitors in our marketplace.”

Aside from BofA’s strong customer service model, the bank has the ability to compete in other ways.

“BofA has the ability to compete on the basis of rates, advertising muscle and product breadth,” Carusone said. “I don’t think they’re flexing as much financial muscle as they could.”

Despite BofA’s many competitive strengths, community banks haven’t yet noticed a change.

“We have yet to see that anything has changed from a competition standpoint,” Quinn said.

But that likely will happen in the future, some bankers said.

“We’ll know that they’re ready [to compete more aggressively],” Jatkevicius said.

Although many local banks haven’t felt BofA’s full impact yet, consumers have probably noticed their ads on television, radio and billboards.

“I would say we have advertising across the boards,” Liftman said.

Those ads will continue, she added.

As a result, banks across New England are getting ready for the competition by offering new products and increasing their marketing.

Banknorth Massachusetts is stepping up promotions as well as spending more to advertise.

“We’ve increased our ad budget,” Bramley said.

Recently, the FleetCenter in Boston – home of the Boston Bruins and the Boston Celtics – was renamed TD Banknorth Garden and a huge sign was unfurled on the building to announce the change. The new name becomes effective July 1.

“We’re trying to get our name out there,” Bramley said.

In addition, Banknorth Massachusetts plans to extend hours for some branches once a week. Bramley said the bank is also pushing small-business lending.

Scituate Federal Savings is trying to make customers aware that smaller banks can offer the same products and services as larger banks, Quinn said.

“We think we can take care of those customers much better than [BofA] can,” Quinn said.

In Connecticut, Liberty Bank also has introduced and focused on new products, such as money market and savings accounts linked to its Connect Checking account.