Some Surprises in 'American's Most Bankable Cities' List.

• Author: Linsley, Clyde

No place is the need for lists greater than in banking. Extensive research has shown that banking is a veritable wasteland of interesting comparative rankings. There isn't even a Best Dressed Banker list, as short as that may be. Therefore, as part of its mission to meet all the needs of the banking industry, Furash & Co. has developed its first annual list of "America's Most Bankable Cities."

How the rankings were made

To arrive at the list, Furash looked at a number of factors that indicate strong and growing demand for financial products of all types. These included the types and number of products used, household balance levels, market growth, income characteristics and the like. They examined all 329 Metropolitan Statistical Areas (MSAs), and ranked each on the basis of 18 key variables grouped into three major categories: market size, market vitality and product usage. Scores for each variable and category were then weighted and combined to determine overall market attractiveness. It is this combined score that produced the rankings, not the rating on any one variable. The highest-ranking markets tended to rate highly across all variables.

Not surprisingly, most of these variables correlate strongly with affluence. In short, rich people have more money, use more types of financial products and maintain higher balances. This is not news and is why many banks have targeted the affluent market for special attention and expanded their operations into affluent market areas.

Does this mean that affluent markets are the only good (and, in fact the best) markets for financial services? Not necessarily. In fact, in many cases there is a disconnect between having a strong presence in affluent markets and financial performance. For example, some of the best performing banks in the United States are not major players in the top markets listed in the study, while a number of poorly performing institutions have dominant market shares.

The reason is simple: It's hard to make money off of rich people. They demand high levels of expensive service, tend to spread their money around to a number of providers and want the best price. They may be willing to pay $70,000 for a car, but won't pay $4.95 per month for banking services. Nevertheless, most banks continue to look for opportunities to expand into high-growth, high-income markets because (to paraphrase Willie Sutton) "that's where the money is." Therefore, the list tends to be skewed in favor of...