Competition in the banking industry is ruthless, but Jon Park has found a way to grow Westfield Bank while larger banks struggle.
Rather than using the same old strategy of building out a network of branches and ATMs, Park has used a contrarian strategy of taking advantage of the existing infrastructure of other banks, renting access to distribution channels for use by Westfield’s customers.
The bank has two arrangements with regional banks that provide Westfield customers the ability to deposit at 1,830 branches, and has three separate arrangements with regional banks that provide surcharge-free access to more than 2,000 ATMs.
Besides avoiding the millions it would cost to build Westfield-branded branches and ATMs, the annual industry costs to own and operate a bank branch network vary between 1.5 percent and 2 percent of deposits. Westfield’s strategy provides a competitive cost-of-deposit advantage of approximately 1 percent. This advantage is then used to pay slightly better rates on certain deposits and allows it to attract and afford to pay for top banking talent.
While other banks are attempting to lure customers with free checking, Park has headed Westfield in the opposite direction. Free checking promotions draw high volumes of unprofitable banking customers, and trying to compete in a commodity business by increasing accounts is a losing business strategy.
Instead, Westfield focuses on proactively acquiring only profitable individual business customers by establishing a stable relationship with a banker-adviser and communicating a compelling customer value proposition.
The strategy, which is summed up by the bank’s “dream big, bank small” tagline, has attracted more than 6,000 customers from competitors. The company surpassed 2002, 2003 and 2004 projections for growth and profitability, and is well-positioned to continue building momentum in its targeted market areas.
How to reach: Westfield Bank, (800) 368-8930
