For a small financial institution like Enterprise Bank, with $50 million in assets, opening a bunch of offices around town just isn't in the cards.
On the other hand, Enterprise Bank depends principally on close relationships with businesses and the concept of providing a high level of service to its clients.
And while online banking services, which Enterprise Bank does offer its customers, are growing in popularity and accessibility, there are some transactions, like check and cash deposits, that can't be made in Internet time. Businesses that receive most or a sizable portion of their payment transactions by check still need to get their deposits to a bank.
That appears to tip the scales in favor of large commercial banks operating extended networks of branch offices, which depositors can easily access on a regular basis. Enterprise Bank, however, has figured out a way to make deposit services easier for its business customers, while providing a potential new marketing tool for the bank.
Banking without branches
The obstacle for Enterprise Bank is that, while its clients are concentrated in the business sector and spread over several counties in Western Pennsylvania, it operates a single fixed-location branch in Allison Park. For a customer in, say, Cranberry Township, who needs to make several deposits a week, it may be impractical to drive to Enterprise Bank.
But getting deposits into the bank permits customers to get funds credited to their accounts faster and meet their obligations in a timely way. It can allow customers to shift funds into interest-bearing accounts until they need to access them.
"Traditionally, everyone has to go to the bank to do business," says Don Whitehead, Enterprise Bank's president and CEO. "We said, 'Let's turn that around and go to them.'"
The answer for Enterprise Bank is Enterprise Express, a mobile branch that travels to customers' locations to retrieve their deposits. The service, which uses two vans equipped safes and some high-tech amenities to retrieve deposits from customers, was launched last November with nine customers. That reached 25 in May and should number about 40 this month.
The bank has added a second van and driver and is about to add a third employee to help manage the day-to-day activities and prospect for new customers.
The solution, Enterprise Bank's founders decided before the bank opened its doors in October 1998, would be a pickup service for its customers. But the bank's management was reluctant to use a third-party courier service, and armored services were too costly. Ultimately, they decided to create their own service.
While Pennsylvania's banking laws prohibit banks from operating courier services, regulations allow them to own mobile branches, as long as they meet certain requirements concerning things such as where and when they will operate.
How it works
Clients can request the service from one to five days a week, with the arrival time determined by their location on the route. Collections begin at approximately 8:15 a.m. and continue until 2:30 p.m. The van driver collects each deposit in a tamper-proof bag and places it in a drop safe in the vehicle. The driver has no access to the safe, which is not opened until the van returns to the bank.
Constant wireless communication is maintained between the van and the bank. Each van is equipped with an on-board computer guidance system that assists the driver in locating the next stop. Additionally, a satellite system can locate and track the van.
If necessary, the vehicle can be disabled by a security firm via a remote kill switch.
The cost factor
By law, banks are prohibited from paying interest on corporate accounts, but they can calculate the interest that would be accrued on such accounts and post it monthly as a credit toward services. On that basis, a customer that maintains a balance of approximately $50,000 could get the mobile branch service, which costs $6 a trip, three days a week at no charge.
"The objective isn't to generate fee revenue," Whitehead explains. "Its objective is to develop deposits. We're perfectly happy if no one pays fees for this directly because it means they paid for it with their balances with analysis."
The advantages for customers reside in convenience, security and costs. They avoid trips to the bank and delays in having their deposits posted to their accounts.
"The service has been a real convenience," says Joel Zytnick, owner of Zytnick Financial Services, operator of the downtown Pittsburgh United Check Cashing store. "In my business, it's absolutely imperative that deposits are processed by the bank as soon as possible."
For Enterprise Bank, the service means an opportunity to increase deposits and gain customers. Without the mobile branch, the geography issue would have remained an obstacle. The mobile service, on the other hand, helps to overcome the objections that a business owner might have had to becoming a customer.
With an additional employee, the bank will be able to better market the service. As Whitehead points out, the bank can lead its sales pitch now with the service to potential customers. As it identifies and secures additional clients along its existing pickup routes, the mobile branch can gain productivity and cost effectiveness.
At first, Whitehead says, the bank decided for security purposes to maintain a low profile for the service. Given the small amounts of cash the service transports, the security measures in place and the infrequency of courier holdups, that decision was reversed.
"We really debated that," says Whitehead. "We recently made the decision that we were probably being overly cautious about all of that."
The promotional advantages, the bank decided, far outweigh the minimal risk to transporting deposits in a physically and electronically secured vehicle. So it had the vans emblazoned with the Enterprise Bank logo to bring attention to the service. Now, says Whitehead, "We've got two potential billboards running around."
How to reach: Enterprise Bank, www.enterprisebankpgh.com or (412) 487-6048
Ray Marano (firstname.lastname@example.org) is associate editor of SBN magazine.