Community Banker Innovates, Connects With Community to Prosper
July 9, 2014
A small-city banker with over 8000 Twitter followers? Meet Jill Castilla, who recently became the CEO of Citizens Bank of Edmond (OK), has gained attention rapidly in the banking world for her innovation and community engagement. Castilla is the fourth generation of her family to work for Citizens, following service in the military and with the Federal Reserve Bank of Kansas City. Her local outreach through social media is inspiring many others toward greater approachability and open communication in community banking. Castilla’s quick embrace of new technology goes beyond Twitter (also @CitizensEdmond); the bank’s cutting-edge ATM systems employ the first real changes in the technology since the 1980s.
Citizens Bank also invests itself in helping other local entrepreneurs — and not just by loaning them money. As we publish, the first image one sees on their homepage is a local cafe owner and the slogan “Sip local.” And Citizens doesn’t merely organize cash mobs for local businesses in Edmond, it gives employees money to spend at the targeted business!
You have just a single downtown Edmond location, which seems to be an anomaly for successful community banks these days. Why not have 7 branch offices?
At one point we had three other full-service locations in the downtown area. We chose to sell the real estate in order to reinvest the capital in new technology and increase our loan offerings. Currently, we still have two access points with a lobby and drive-thru. This new technology, including interactive teller devices overlaying ATMs, allow customers to speak with a teller. This is counter to the typical multiple-branch model requiring physical accessibility.
By closing those physical locations, Citizens Bank gained $2.3 million in assets and saves $1.5 million annually. The technology upgrade required a modest investment of $160,000. We have been in Edmond for 113 years and will be operating for another 113 years, and we believe we’re developing a model for the future. Now, we are a partner in selling this technology to other community banks (for only $16,000). We speak with fellow community banks regularly to share resources and ideas for improvement — counter to the typical bank culture which tends to be protective and exclusive.
Our readers know that many of the rules passed after the megabanks meltdown a few years ago now entangle community banks in costly regulatory compliance that does nothing to address the roots of the “Too Big To Fail” problem. If you could boil it down to three items that must change, what would they be?
The most important issue is lightening regulatory load for community banks to be more scalable and relevant. For example, community banks must comply with restrictions on capital for international standards, but they weren’t intended to apply to small banks like us. Other restrictions inevitably could incent mergers of community banks resulting in less consumer choice.
Specifically, the Consumer Financial Protection Bureau was created to protect consumers but, increased regulation and required paperwork to comply has caused a burden on consumers. Community banks have become less willing to approve mortgages and loans, especially for small business owners who may have difficulty documenting the cash flow for qualification. Without proper cash backing, these loans maybe lose the safe harbor for the lender, effectively penalizing small business owners seeking these loans.
Community banks can develop relationships with these business owners and lend based on local knowledge, rather than meeting a defined “box.” Additionally, banks maintain a “rainy day fund” to cover losses on loans, but new accounting standards may require substantially larger funds set aside, restricting loans. For more information, see the Independent Community Bankers of America’s high priorities list.
What advice would you offer IBA leaders on partnering with community banks?
Call me anytime! Seek opportunities for free media detailing the successful partnerships with community banks. Identify and utilize a social media presence, however, be aware that banks must comply with regulatory guidelines to exist in the social media realm.
When you conduct a “cash mob,” you’re giving 73 employees $5 – $20 each to go spend at a local independent business. Do you think it leads directly to new business?
New business is not our objective, and our intention is to uplift the community. There is, of course, a free marketing aspect for us and for the small business. Cash mobs also expose our employees to businesses they may not have been aware of previously.
Recently, we engaged in a week-long cash mob of an auto repair shop. In return, they provided discounts to our participants, and we were able to gain press coverage, benefiting and hopefully driving new customers to us and the auto shop. [See AMIBA’s Cash Mob Tips]
You seem to be gaining a high profile recently for the CEO of a relatively small bank. What impact is the community engagement you’re doing having on other bankers?
I am trying to develop an alternative strategy and increased accessibility by utilizing social media. The chamber of commerce and Rotary Club are traditional channels utilized by banks to reach and develop relationships with the small business sector. While we continue to attend traditional networking activities, this sector is evolving rapidly and all small businesses aren’t funneled into these traditional channels. Social media can serve as a new approach to building relationships and amplifying a bank’s visibility within the community.
For example, the largest food truck even in the nation is in downtown Oklahoma City and we were asked to provide the ATMs due to our social media connection. Our staff also participates by attending and promoting Citizens Bank. Due to our involvement and social media presence, the organizers and other community groups have sought us out to cross-promote through our social media outlets.
Lastly, we’ve wanted to hear from a banker whether you have any concerns about our new initiative to get people stamping money with the pro-local business sentiments.
No, I think it is a great idea!
Jill Castilla and Eric Morse of Switch to Community provided one of the most talked-about sessions at AMIBA’s 2014 Go Local, Grow Local conference. You can listen to an audio recording of this session and see some special offerings from Becky McCray here. Becky is author of Small Biz Survival (and another standout conference speaker)