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On the surface, bank mergers might seem like an expansion of financial services to communities. The reality is it’s not as beneficial as it may seem.
Today’s economic landscape is driven by profits, growth, and market share, both global and local. From AI technology, oil and energy, to utilities and local financial institutions, everywhere you look smaller businesses are being merged into global powerhouses.
But that doesn’t mean progress. In some cases, it can lead to higher consumer costs, destabilization of regulations, and a negative impact on the customer experience.
That’s why local banks like Union Bank are more important than ever when it comes to financial services. For over 130 years, Union Bank has worked with local folks in Vermont and New Hampshire to understand their lives and financial needs.
The Hidden Risk of Bank Mergers
Before we dive into details, let’s take a look at what a merger really means, and how it differs from an acquisition.
A merger is when two companies create a single, new company that leverage combined assets and liabilities. An acquisition is when one company (typically a larger company) takes over either all or part of an existing company’s assets and liabilities. Many times, the acquired company becomes a subsidiary by retaining its brand but follows the larger companies’ business model.
In terms of financial institutions, the end result of either a merger or acquisition are typically the same:
- Customer service disruptions
- Impact on products and fees
- Decline in personalized experience
- Potential exposure to corruption
Customer Service Disruptions
During any merger there is a transition period where technology, processes, and control platforms are consolidated to reduce redundancy within the bank.
While the banks may see this as critical to growth, it can result in service disruptions on mobile apps, delays in common transactions that can leave customers without access to their funds, and higher wait times for a customer service representative.
Impact on Products and Fees
Having a consistent and reliable experience with financial products like checking accounts and understanding fees are important to all customers.
You don’t want to suddenly see increases in fees on products you’ve used for years, or even worse have free checking accounts now require a monthly fee. There have been noted cases where after a merger certain accounts or products are discontinued or closed, leaving customers in the dark and potentially losing money.
Decline in Personalized Service
A recent study over 20 years of bank merger trends in Northeast showed that for every merger there has been an average of 8.7 bank branch closings. That means customers that relied on their local brank for everyday banking are left without options or need move to another local bank.
In addition, when branches close after a merger it impacts involvement in the local community. Many local banks sponsor fundraising events, contribute capital to energize local business, and provide financial literacy education.
Potential Exposure to Corruption and Unfair Practices
While corruption might not be at the top of the average bank customer’s mind, it can have a tremendous impact and disruption to their banking experience.
Recent examples include a large credit union being fined $95 million for unfair practices of overdraft fees, and the most significant example is a $3 billion fine for anti-money laundering that led to store closures.
Many times, after mergers criminal organizations will take advantage of inconsistent regulation practices that can tarnish a bank’s brand leading to customer distrust.
Stability in Banks Leads to Confidence
Local banks with years of experience like Union Bank offer customers stability and predictability with key factors that help build customer confidence.
The Power of Local Banks
Just because a bank doesn’t have a flashy logo, expensive commercials, or sponsor major entertainment events, it doesn’t mean they are offering less than the big banks. In fact, local banks have a bigger impact on the nation’s economy than you think.
The Independent Community Bankers of America (ICBA) compiled some key statistics about how important the longevity and stability of local banks have on the economy.
- Represent $4.0 trillion in consumer, small business and agricultural loans
- Have nearly 45,000 locations nationwide
- Employ nearly 700,000 people
- Make roughly 60% of U.S. small-business loans under $1 million and 80% of banking industry agriculture loans
- Are the only physical banking presence in one in three U.S. counties
Comfort in Predictability
Because local banks don’t rely on a large parent company dictating fees, changing application processes at any time, or removing a product without notice, customers can rely on predicable financial services.
This is most important when planning budgets; no hidden or new fees or sudden changes in rates means you can confidently allocate and save your hard earned money.
Straightforward Mortgage Services For New Hampshire Residents
Local banks like Union Bank don’t just serve their customers—they’re part of the same community, just like the people who work there. That connection gives them a clear understanding of the importance of a simple, straightforward mortgage process.
They ensure the application process is clear and offer assistance if needed, handle escrow, offer consistent terms and upfront rates, which means customers can finance their home with confidence.
Control of Decisions
When a bank is merged or acquired by a large bank, the ability to make decisions on a local level is lost. This can impact how local banks make decisions on major changes, customer service policies, or even how they engage and support local initiatives.
Not to mention local businesses can sometimes suffer from not having their full financial potential being taking into account when applying for loans. How can a bank make a decision on your business when they don’t even live in the community or know the business owner? That will never happen at local banks.
The Union Bank Difference
As you can see, large banks that like to merge or acquire banks just for the sake of growth can never match the personalized experience and service like local banks.
Union Bank has been independent and rooted in Vermont and he New Hampshire communities for more than 130 years. We offer the same products and services as the large banks, but with a personalized approach.
- Personal Banking – from basic checking accounts, specialty products for seniors, or Money Market accounts, they have you covered all with the convenience of mobile banking
- Commercial Accounts – keep your local business running smoothing with checking accounts, merchant services, HR and payroll, and lending products tailored to your business needs
- Mortgage Loans – buy your dream home, find a vacation home, or refinance for home improvements, Union Bank has it all
- Personal Loans and Credit Cards – consolidate debt, tap into your home equity, or open a new credit card
- Wealth Management – take control of your retirement and set up your estate and trust
- Union Bank Blog – get sound financial advice and tips to make your money work harder for you
Visit Union Bank at one of their New Hampshire locations, open an account online, or contact them. Once you experience the Union Bank difference, you’ll know why they have been trusted by the Vermont and New Hampshire communities for more than 130 years.
