Solutions Based Banking: The Key to Success for Webster Bank's Foray Into Boston

How can you be a leading New England bank without a presence in Boston? That's the question Connecticut based Webster Bank asked itself after years of building and acquiring branches elsewhere in New England. The conclusion it came to, apparently, is that you can't, which is why it recently opened a 15,000 square foot branch office in the old Boston Stock Exchange building on Franklin Street. The branch is the first of many that Webster Bank has said it will build or acquire in the Boston area over the next few years.

While from a consumer's perspective it's heartening to see banks actually expanding during a difficult economy (thanks in part due to $400M in TARP money and $115M from investment firm Warburg Pincus), Webster Bank's decision raises a question: does Boston really need another bank?

The answer, we think, is it depends.

If Webster Bank turns out to be yet another average bank promising not to be your average bank, the answer is no. Boston has plenty of banks promising good customer service, community involvement, and below average fees. In the end, most fall a bit short as they are still (despite what they say) very product rather than relationship driven.

If, however, Webster Bank is here to truly differentiate itself by offering financial solutions rather than financial products, then it will fill a large void in the banking community here.

What do we mean by financial solutions? We mean taking the time to understand the needs of business and consumer customers and helping them craft and execute on a strategy for meeting those needs.

For example, a friend of ours recently called local banks to deposit a large check she received from the sale of a home. The responses she got from bank representatives (one of whom took all day to call her back) were along the lines of "Are you interested in a savings account or a CD? I could also refer to you to someone in our investment department to discuss stocks and bonds if you want."

While our friend eventually chose a CD product from one of the banks, the respondents all made the same mistake: offering a solution before understanding her goals.

None of the representatives asked questions to build a relationship, gain trust and provide guidance. As a result, our friend chose a bank based on how quickly they answered the phone and their rates. Even the bank she chose may have left an opportunity slip by since it’s not clear that she will ever think of them as anything more than a place to put money in CDs—and that may mean moving her money when she finds better rates

How does this relate to Webster Bank? It illustrates that the biggest opportunity for Webster is not having a branch in downtown Boston, but in changing the way banks relate to customers and customers relate to banks. What would it take for Webster Bank to do this?

q Recognize that the only opportunity its staff has to offer a real solution may be the very first contact—and that very likely will be through their website or a conversation with a phone representative. Most banks’ salespeople are comfortably situated in branches—behind desks that some of their best prospects may never sit at.

q Hire front-line employees who are curious and interested in people.

q Train them in the art of consultative selling.

For Boston's sake as well as Webster Bank's, we hope Webster uses a solutions based approach to meeting the needs of customers in Boston. If it does, Webster has a bright future here. If it doesn't, Webster will have spent a lot of money getting into a city that already has plenty of places to bank.