An article in the May 11 edition of The Wall Street Journal caught our eye last week. While the piece seemed to emphasize the rift between big and community banks, to us it seemed to serve up some lessons on how – or how not to – compete against the big boys of banking.
In short, the story covered a spitting match between Camden Fine, president and CEO of the Independent Community Bankers of America and James Dimon, CEO of J.P. Morgan Chase.
The feud was sparked by an op-ed piece in the WSJ in which Dimon called for greater cooperation instead of fighting between big and community banks.
“I’m completely sympathetic to the community bank saying that some of these regulations are killing us, these regulators were meant for large banks,” Dimon said. He also called for the easing of regulatory burdens on community banks, even if they aren’t reduced on larger banks.
Fine’s response? “Just because Jamie Dimon says let’s sing ‘Kumbaya’ doesn’t mean community banks are going to just line up like a Greek chorus. This is an attempt to link the interests of megabanks to community banks in order to mitigate the political heat that is on them right now.”
Dimon retorted: “I think the guy who wrote that is a jerk, OK? And you know, the fact is I was stating a fact.”
Three quick observations:
- On the face of it, Dimon is right. There are things – like banking in international markets – that Chase and other big banks can do and small banks can’t. And, he actually fired a salvo in favor of small banks when he called for an easing of regulations on small banks when those new rules were aimed at mega institutions.
- And so what if Dimon is trying to “mitigate the political heat” on big banks? That’s part of the reason Chase pays him a large chunk of change.
- And last, name-calling and public spitting matches don’t do big or small banks any favors. All of American banking is under a political microscope, especially in this election cycle.
Instead of concentrating on the “My bank is better than yours” battle between Dimon and Fine, we choose to take a page from the Andrews sisters and “accentuate the positive.” What can community banks learn from this spitting contest?
- When it comes to the war on excessive regulation, there is strength in numbers. Dimon is right in saying there needs to be greater cooperation, especially in taking banking’s case before governmental leaders. These are hard regulatory days for banking and the need for common ground is vital. Find ways to work with your competition, on building up banking and on building a better community. That’s an easy win-win.
- Accentuate the positive: Dimon’s call for the easing of regulations on smaller banks when the new laws target big institutions is a good thing for community banks. Instead of taking a shot at Dimon, use the positive to help community banks.
- Play to your strengths: As a community bank, do what you do well and don’t worry about the big guys. Just as the large banks are able to do things that smaller banks can’t, community institutions and credit unions can offer benefits that the big boys can’t touch. Smaller bureaucracy, better customer care, the ability to nurture and grow your employees because of the shorter distance between the drive-thru window and the executive board room and a better, deeper understanding of your customers and your community.
- Battle your competitors, but do it with class. I played for a football coach in college who challenged us to fight hard between the white lines, and to win with class and humility and lose with dignity. The same holds in the banking world.
- Trashing the competition damages your brand: Jamie Dimon’s insult didn’t do anything to help J.P. Morgan Chase’s brand or reputation. You may think your competition is a clown car full of bozos, but don’t say or write it publicly. American banking is a centuries-old, honorable profession and that message should be communicated in every interview, every speech, every Facebook, Twitter or Instagram post. Any chance to tell your bank’s story – whether it’s in The Wall Street Journal or the Mayberry Gazette, is a marketing opportunity. Never forget that.
In fairness, Fine was spot on when he said, “While the American economy is indeed based on interdependence, concentrating most of the banking industry’s assets in a handful of megabanks distorts the financial system, perpetuates systemic risks, and threatens institutions not deemed too big to fail.”
In that paragraph, Fine, like Dimon, did what he is paid to do, advocating for community banks. But spitting matches like the Fine-Dimon bout don’t help community banks. Take the high ground.
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Here’s another interesting article on Camden Fine: