More Bank for Your Buck

The overhaul of banking laws presents new opportunities and a series of challenges. Here's how these changes may affect you.

her circle of competence is providing the best advice for what I’m looking for.”

However, Gladue says that over the next couple of years, customers will see financial institutions take various approaches. “Some will try to have salespeople who are knowledgeable in all areas; others will try to keep separate sales forces so that they have experts in insurance [and] loan officers, and then those who strictly sell securities,” he explains. Other firms, however, may decide to stick to their businesses and remain more traditional institutions. Gladue says it is still too soon to tell which approach will prove to be best for individual customers.

Sharing The Wealth With Black Banks
Several industry experts argue that the new law could provide some unique opportunities for African American-owned financial institutions, particularly in areas where they have an established customer base and offer personalized niche services. For instance, the new law could sprout partnerships between black-owned banks and mainstream insurance companies and brokerage firms, says Deborah Wright, president and CEO of Carver Bancorp. (No. 1 on the be banks list), the New York-based parent company of Carver Federal Savings Banks, the nation’s largest African American-owned bank. This would enable such financial institutions to generate new sources of income by marketing new products and services to customers.

Walter E. Grady, president and CEO of Seaway National Bank of Chicago (No. 5 on the be banks list), agrees. With traditional sources of income trailing off, “instead of just relying on offering checking, savings and mortgage services, black-owned banks could potentially sell car insurance, annuities, stocks and municipal bonds,” says Grady. “This creates [more of] a level playing field for us, albeit on a smaller scale.” Seaway, with assets of $274 million, plans to offer brokerage services, annuities, car insurance and other nonbanking services.

Grady adds that the law offers African American-owned financial institutions the opportunity to pick up customers from larger mainstream institutions, such as Merrill Lynch and Citicorp, as they expand their operations. Smaller banks can offer services at lower fees because their overall expenses aren’t as great as the larger players’.

Donald Davis, chairman and CEO at First Independence National Bank (No. 13 on the be banks list) of Detroit says that by forming alliances or partnerships, black-owned institutions also could offer minority businesses more products and services, including brokerage accounts, asset management and municipal bond underwriting. “In turn,” Davis says, “those services would benefit black-owned businesses because they would provide them with new sources of financing and the ability to raise capital.”

Whatever the fallout, experts say the new law will have a profound impact on the country as financial institutions walk a fine line between serving Main Street and Wall Street. Stern still believes that because financial service companies need to increase market share and revenues, they will take notice of the $600 billion income of the African American market.

“I hope [companies] aren’t so busy trying to be a one-stop shopping venue that they continue to miss the overall message,” Stern says. “The customer and his

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