Bank of Boston and money markets (NCBC)

Bank of Boston and money markets (NCBC)Bank of Boston Corporation is a New England-based superregional bank holding company. With 1987 year-end assets in excess of $34 billion, the corporation ranked as the largest banking company in the six-state New England region and the 12th largest bank holding company in the United States.

In addition to an agreement to acquire Bank of Vermont, the corporation owns banks in four of the New England states — The First National Bank of Boston, originally chartered in 1784 as The Massachusetts Bank; Casco Northern Bank in Maine; Bank of Boston Connecticut; and Rhode Island Hospital Trust National Bank.

Bank of Boston’s retail banking activities focus on the New England region through a branch network of more than 250 offices, from northern Maine to southern Connecticut. Further, an electronic banking capability provides customers access to virtually every Automated Teller Machine in Massachusetts, more than 3,000 in New England and over 20,000 worldwide.

Employing approximately 20,000 around the world, Bank of Boston maintains subsidiary offices in 18 states and 30 other countries. The corporation and its subsidiaries provide a broad range of financial services to individual, corporate, institutional and government customers, as well as to other banks. upscalers, money is very positive; it is lifestyle enhancing.” The bank, under Kanner’s tutelage, has developed a successful series of products and promotions specifically designed to appeal to its well-to-do customers.

Two of these products, “Zenith Portfolio,” a newly introduced personal banking program tor young- and middle-aged affluent!* (Fig. 1-2); and “Portfolio 55,” a promotional package for individuals over the age of 55 (Fig. 1-3), are tangible expressions of an important benefit sought by the bank’s target markets — recognition of themselves as special. Within six months after the introduction of Portfolio 55, nearly 10,000 upscale customers joined the bank, bringing balances averaging from $25,000 to $30,000. In addition, existing upper-income client balances nearly doubled to an average of over $55,000.

Bank of Boston has been careful to tailor all messages to these different groups in a way that creates, in Kanner’s words, “a consistent umbrella.” This uniformity in bank image is achieved through the use of a “portfolio concept” — building multiple products and services around a basic interest-paying checking account (called a NOW account) with minimum balance requirements. Despite the success of the program which Kanner estimates will move as much as a billion dollars in 1988, she feels the bank is only now at par. “We must differentiate ourselves on the quality of our service. Our customers’ concerns must drive more than our programs; they must also define the way we talk to customers and the way we perceive ourselves.”

Homas Garrot. president of National Commerce Bancorporation (NCBC). views the affluent market strategy- adopted by banks such as Bank of Boston as an opportunity for his firm. He explains his firm’s marketing strategy. “We are encouraging low-income people up through middle-income families (a $30,000 average household income). Those folks have not only not been approached by most banks, they have basically-been run off. With us, they find a bank that is not only willing to serve their needs but is actively soliciting their business.”

National Commerce Bancorporation (NCBC) is a southeastern U.S. bank headquartered in Memphis, Tennessee. With assets of more than $1.3 billion and an employee count of 939, NCBC has provided retail and commercial banking services to Memphis residents for 15 years.
The company offers a wide product line of retail services designed to aid individuals with their personal financial needs, including a comprehensive offering of credit products, traditional checking and savings plans, IRAs and certificates of deposit.

Through its traditional branches, the Money Market branches located in Kroger supermarkets and its ATM network, the bank has positioned itself for growth in the retail banking arena. Known as the business bank for the area, NCBC serves the complete financial needs of the Mid-South business community, providing services for a diverse market of commercial borrowers and depositors including manufacturing, service industries and financial institutions.

NCBC’s research on this segment of the U.S. population revealed the importance of convenience in their choice of financial institution. That information lead the bank to set up 30 full-service branches or “Money Markets” in Kroger supermarkets in Tennessee, plus 22 additional locations through the bank’s sublicensing program across the southeastern stales of Tennessee, Mississippi, Virginia, Arkansas, Kentucky, Missouri and Florida. A 50% increase in retail deposit accounts in under two years provides a telling indication of the success of NCBC’s strategy of targeting ordinary American families.

A convenience strategy with a different bent has been adopted by First Nationwide Bank, a U.S. federal savings bank. Casey MacKenzie, executive vice president of Marketing, sees her bank’s future in catering to the needs of middle America, individuals whose income is between $30,000 and $80,000. First Nationwide is also looking at the age of its clientele. “To make a profit in the future, we have to have a younger customer,” says MacKenzie. “We can’t just have our traditional, bread and butter customer over 55 with $20,000 on deposit. We also need a younger customer, a heavy user of credit, a first-time home buyer.”

“My answer to the question about where people with a million dollars are going to get loans is that I don’t care!” Anthony Frank, former chairman & CEO. First Nationwide Bank.

And those people, her firm’s research indicates, are to be found walking into K mart stores. (The typical K mart store customer, for example, is about 42 years old, a full 10 years younger than the typical thrift customer. His or her annual household income is $31,000 or $6,000 below that of the average savings institution depositor.) So it is there, in one of America’s largest retail chains, that this bank has successfully set up shop.

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