What if you gave a party and nobody came?
Or to put a finer point on it, what if one of your bank’s biggest selling points—often one that’s right there in the name—flies right over the head of the people you’re hoping to sell to?
Mutual community banks face a conundrum. What they consider one of their biggest selling points—the concept of mutuality—most of the general public doesn’t really understand. Gregg Tewksbury—president and CEO of Concord-based New Hampshire Mutual Bancorp, which includes three affiliated mutual community banks and a wealth management firm with a combined $2.3 billion in assets—has commissioned in-market consumer surveys. “There’s still a lack of understanding about what that ownership structure is,” he says. “It doesn’t resonate as a compelling reason why someone would choose a mutual bank versus a non-mutual bank.”
Over the decades, many of the distinctions that set bank charters and ownership types apart have blurred. National banks, thrifts, state banks, savings banks—today, they usually offer a similar range of consumer and commercial deposit, loan and asset management products. But while all banks strive to serve their customers well and benefit their communities, mutuals remain distinctly organized to “exist for the economic well-being of our customers and community,” as Tewksbury puts it, owned not by shareholders but rather governed in the interest of the broader community and the depositors.
To help illuminate this challenge, the ABA Banking Journal and Morning Consult recently surveyed Americans about their views on mutual banks. The topline finding is that just 5 percent of U.S. adults say they are very familiar with mutual banks. Eighteen percent said they are somewhat familiar, and more than three quarters were mostly or completely unfamiliar with the concept. (See Figure 1.)
Mutual bankers agree. “One of the biggest challenges that we have in terms of educating our customers and the community is on the differences between mutual and some of the other institutions around here,” says Janice Kelley, EVP for HR and corporate communications at Windsor Federal, a $515 million mutual thrift in Windsor, Connecticut, just north of Hartford.
That lack of familiarity means that consumers aren’t especially likely to pick a mutual for their banking needs (see Figure 2). Just 23 percent said they were somewhat or very likely to choose a mutual bank, compared to 19 percent who said they were unlikely and 58 percent who said they didn’t know or weren’t sure.
However, once consumers received some more information about mutuals—namely, that they are governed on behalf of their community stakeholders, not owned by shareholders, and that they offer most of the same products and services as other banks with the same deposit insurance protections—their favorability goes up, rising from 20 percent very or somewhat favorable to 52 percent. On net, 24 percent said knowing the details about mutual makes them more likely to choose a mutual. (See Figure 3.)
As Tewksbury puts it, “when we have an opportunity through grassroots efforts to share that message with customers and communities, a lightbulb goes on.”
Getting the word out
Thomas Fraser leads First Mutual Holding Company in Lakewood, Ohio, a $2.1 billion MHC with two affiliated Ohio mutuals and two more in the process of affiliating in Ohio and Kentucky. The MHC structure allows each affiliated bank to maintain its own brand and emphasize its mutual character. “We think it’s really important that mutual banks reflect the nature of their community and that people identify with that,” he says.
To help each bank do that, First Mutual deploys a “wheel of mutuality” in each branch that illustrates what makes mutual banks distinctive. “We do emphasize the fact that deposits are reinvested 100 percent locally,” he says, and the banks make a point of contributing about 10 percent of earnings each year to local philanthropies.
Windsor Federal—which is the only mutual headquartered in Hartford County, Connecticut’s second-most-populous—has gotten “a little bolder,” in its messaging, Kelley says, using the tagline “customer focused because we’re simply customer-owned.” It emphasizes that “we cannot be bought,” Kelley says. “Our commitment to our customers and communities is stronger than ever.”
With any branding effort, “it just takes consistent messages over long periods of time,” Tewksbury explains. However, most community banks don’t have the budget over time to build brand around mutuality; instead, they find it better for business to advertise their products, rates, technology and services. “We have not found an effective way to market mutuality.”
He thinks it might take a, well, mutual effort to build the broader brand. One concept Tewksbury is working on is a toolkit for mutuals with sample ads, videos and communications collateral—including a signature logo that all mutual banks could use to signal what sets them apart. “That’s the only way we’re going to build traction around mutuality,” he says.
Reinforcing the message
One important aspect of the mutual identity is its value for bank employees. “Internally, we spend a lot of time talking about mutuality, and it resonates with the employees of the bank a great deal,” Tewksbury says. “The mutual brand is so important for recruiting,” winning over the kind of people who want to “use our platform as a bank to enrich the communities we live in.”
Fraser agrees. “If we’re all doing our jobs, it’s a healthy symbiotic relationship,” he says, adding that bankers at a mutual affiliated with his company “don’t have to worry about the pressures of being acquired by another bank and they can count on us to be here for the long term.”
And as the survey research indicates, there’s a big payoff to educating everyone about mutuality. Some customers at First Mutual-affiliated banks have told Fraser “You’re even better than a credit union,” he says. “You pay taxes, you give back to the community and you have even more products!” This reaction is backed up by a net promoter score of 60—nearly double the industry average for banking and on par with consumer brand leaders like Apple, Chick-fil-A, JetBlue and Lexus.
“When I make a deposit to a bank I have a say in, it’s pretty powerful,” Fraser reflects. “The real reason for optimism is we win customers every time we get the message across.”
This article originally appeared in the March/April 2020 issue of the ABA Banking Journal and is reproduced here with permission.