Lessons relearned during the recent unpleasantness.

• Author: Motley, I. Biff
• Position: Customer Satisfaction

Recent commentary related to the so-called stress tests and other postmarket-meltdown effects on our industry has some experts suggesting that we need to move away from a "too big to fail" structure in the financial services industry. Though they do not actually say it, what they are suggesting, is that the traditional community bank model was pretty solid and that maybe we should begin to rediscover some of its values.

I recently brainstormed this idea with my good friend Alex Sheshunoff, and we came up with five pretty good arguments for a community banking focus, regardless of a company's size. Here they are, and I'd enjoy hearing from you on this subject, pro or con.

Being driven by long-term customer relationships works better than exotic profit optimization models. A postmortem of the recent unpleasantness suggests that much of the problem revolved around the clever, if not wise, concepts of decoupling financial product peddling from customer relationship management. This shift is exemplified by the dramatic growth in recent years of various ill-designed "exotic" financial products. What exactly is a credit default swap, anyway? It seems to me that underneath all the hype, this "exotic" is basically nothing more than a wager, better suited to Las Vegas than Wall Street.

What started out as a simple idea to enlarge the market for fixed-rate mortgages grew into something so complex, risky and ultimately customer unfriendly that very few of the experts today fully understand it or defend it. A better "model" is for bankers to know their customers, sell them products they both understand, and manage that relationship through time while using simple customer satisfaction measures as one of a few directional road signs.

Capital is the hard-earned savings of your depositors and shareholders Community bankers understand that capital is the money...