Finding your niche: rather than being all things to all people, a bank should identify its greatest strength and specialize in that area.

• Author: Schaus, Paul

THE DAYS OF EVERYTHING-BANKING ARE HISTORY. To be competitive, banks-- particularly community banks without huge technology budgets, resources and scale--must banish the strategy of being all things to all people. Instead, they need to exploit a niche and stand out from the crowd.

Look at some of the most successful banks today (other than the largest of the large). They tend to excel at one thing. Environmentally conscious banks attract customers from throughout the United States. (There was talk of a bank for dog lovers called Wag Bank. It never launched, but the concept of specialty banking is solid.)

Athletes know the benefits of having a niche. An Olympic runner decides what he or she wants to be the best at--sprints, middle-distance, long-distance--and works really, really hard at becoming the best at that distance. A marathon runner--in order to run with the best--doesn't train like a sprinter. Rather than waste time becoming a mediocre sprinter, marathon runners focus their training hours on running 26.2 miles to the best of their ability.

Are you a sprinter or a long-distance runner? Or in banking terms, do you want to excel at automobile lending? Or do you want to excel at offering outstanding customer service? Because, unless you've got a huge technology budget, it's likely that by trying to do everything, you won't do anything well.

However, if you pick one thing to do really well, you can stand out in your market. By picking a niche, you will be able to funnel your budget into that product and service--which will enable you to innovate.

Here are two reasons why you need to develop a niche banking strategy:

1. Consumers shop for banks online.

   You may draw some foot traffic because your branch is on a busy corner, but consumers most likely will pick their bank based on the bank's attributes, not its specific location. If most banking is done online, proximity just isn't as important an issue as it once was.

   Think about how you search for retail products. Whether it's a big-screen TV or a hotel room, chances are that in addition to a Google search to get a listing of potential TVs or hotel rooms, you'll look at review sites to see what others have to say. You do your homework before you even set foot in a store or walk into the lobby of a hotel.

   The same is true of banking. Rather than driving around to see which bank is closest to their home or work, consumers will search online. But they won't do a Google search on "bank."...