The Importance of Banking Locally
I relocated my family from Seattle, WA to Austin, TX, in August of 2008. At that time, my bank accounts (personal and business) were with Bank of America. The nice thing about this arrangement was the Bank of America branch right up the street from my new house. This seemed like total win. That is until several things converged that made me re-evaluate this relationship.
If you recall, August of 2008 was the height of the financial crisis. As the banks were getting bailed out by taxpayers, they were simultaneously cutting off access to credit for their customers. I had a number of credit lines that were paid off but would have provided a lifeline should the need ever arise. Well that lifeline was withdrawn arbitrarily by several banks including BOA.
The second thing that happened was my move to Austin where a number of stores participated in an initiative called GO LOCAL. The idea behind GO LOCAL was that monies spent with local businesses.stayed in the communities where they were spent. This made total sense. Wherever possible I did my best to shop at local stores and restaurants (not chains).
The last straw was the total lack of customer service with the local branch of BOA. Every week or so I would show up, in person, to deposit checks into my account. Every time I went in I was treated like a complete stranger vs a valued customer. Now I get that as a person new to that branch it might take some time to become familiar with me and my small company. Well this familiarity was never achieved. Almost every time I was at the store I banked with THE SAME PERSON. This person NEVER even hinted at a sign of recognition. This was over a period of 6 or more months.
It was this total lack of disregard that made me act. I decided that the best thing to do was to GO LOCAL. I would open new personal and business accounts with a local institution. In this case it was UFCU (University Federal Credit Union) which, lucky for me was located right around the corner from my house too.
I was NOT looking forward to the task of moving numerous auto draft transactions attached to my current bank accounts. This included payroll, credit cards, house payments, utilities, etc. How would I do this with as little disruption as possible. My strategy was turned out to be simple: keep my old accounts open while I move everything to the new accounts. I started by examining each bank statement and seeing what vendors were being paid from my accounts. I opened each vendor’s respective site and changed the auto billing information. This took a few months as some bills were not monthly. After a few months I left a reasonable amount in each account, you know, just in case
Now you might have a few concerns about banking with small local banks. For example you may thing: the small banks do not have all of the conveniences of the big banks. I have a one-word answer to this concern: BLAHBLAH :),
These small banks have access to the same technology as the big banks and in many cases are much more efficient at deploying it. For instance, we have purchased several cars using our credit union. The way they do this is unique. They give us a “blank check” that we take to the car dealer and purchase our car. This is not technically a blank check, but a check that with a limit up to the max amount we were approved to finance. When we finished our negotiations to purchase our vehicles, we fill in the amount of the purchase and sign the check. A few days later, after the car dealer cashes the check we get a call from the credit union and we sign the final contract for our loan. Oh, and this is all done via Docusign. This is a very cool experience and works well. The added benefit is that the interest paid on the loan is reasonable and STAYS IN THE COMMUNITY.
One added benefit is the RELATIONSHIP I have with my credit union. I know the people I bank with, and when I have issues, or need help they are there for me. And in the year 2020 this was especially true. As the Covid virus took over the world and caused a disruption to the economy (including my business) I heard about the Payroll Protection Program which would provide a two months of assistance in making payroll. I was LUCKY enough to secure one of these SBA PPP loans in the first round. I feel that this was due to the fact I had a relationship with my credit union and that they were agile enough to implement their loan program quickly. I have heard directly that some of the larger banks outsourced their work and failed to get the loans their customers really needed.
My credit union was the opposite. They treated their customers with respect and concern and helped secure these desperately needed loans. This isreally assuring and gives me confidence that my decision to bank locally was a good one.