Rockland Trust case study Metrail-Mis 2301 PDF

Preview

Summary

it is the description of the Rockland Trust case study....

Description

Rockland Trust – “Where Each Relationship Matters” Company Profile and Business Context Rockland Trust was founded in 1907 in Rockland, Massachusetts to “promote the business activity and growth of Rockland and its vicinity”. The bank began with only $200,000 in assets and has since grown to $8.9B. As a community bank, its success has been attributed to “having respectful and knowledgeable bankers, as well as robust technology available to our customers”. In contrast to large national or multinational banks, Rockland focuses on local communities to establish themselves as “relationship bankers”. Rockland Trust developed a business model comprised of investing in staff who will be able to deliver the best possible service. These staff demonstrate the Rockland motto: “Where each relationship matters”. In turn, customers contribute to strong financial performance by using services tailored to their needs, such as depositing cash or taking out a business loan. This financial performance allows Rockland Trust to invest in itself, completing the engagement cycle shown below. – vital since 11,000 locally owned banks have closed in the last 30 years. This affords Rockland, as well as other community banks, the luxury of spending more time and resources on each customer. Engagement Cycle It also presents a tradeoff. Spending more time with fewer clients hinders expansion and therefore growth of profits. Rockland combats this by focusing on as well as the customer relationship. Geographic Expansion Rockland Trust’s expansion in recent years been demonstrated through acquisitions. More expansion means more opportunities to provide “award winning customer service.” Out of 82 branches, 66 of them have been the result of an acquisition. Each has allowed geographic expansion, as well as an increase in customer base. Many additions to Rockland Trust, have been other community banks in Massachusetts. These include “Slades Ferry Bancorp, Benjamin Franklin Bank, Central Bank, Mayflower Bank and Peoples Federal Savings Bank”. In their respected areas, the banks would have knowledge of local customers and businesses resulting in greater customer service. This would support commercial lending, which makes up 70% of all lending by Rockland. In 2018, Rockland began proposing the acquisition of Blue Hills Bank. Rockland Trust - Branches Such an acquisition would result in a “growing presence in attractive, affluent markets”, ownership of “the largest deposit market share in Massachusetts”, “opportunity to expand relationships with BHB’s customer and commercial customer base” and “increased scale” which could result in meaningful operating efficiencies.

Prioritizing Efficiency In addition to expansion, With the cycle of engagement in mind, such improvements have been made on consumer facing operations. This is particularly important for business aspects such as brick and mortar branches, which larger banks are beginning to abandon. Bank of America alone closed 1,511 branches between 2009 and 2019. This has led to improvements such as “expanded use of cash recyclers for more efficient transaction processing”, “video teller capabilities” and added drive-up ATMs. This requires Rockland to sync information across branches, especially the most recently acquires, to ensure customers seeking information or service are able to choose between different branches, phone, or online options. In addition to improvements in operations, the bank has also adopted an “analytics software, location model.” According to SAS, these models can be used to identify the relationship between geographic location, people, events, transactions, and assets. Such technology would aid in the strategic acquisition/ launching of new Rockland branches. Rockland has also benefitted from capitalizing on “in-market consolidations” which allowed them to expand their market offerings. For the customers gained through acquisitions, Rockland has aimed to meet all their banking needs. It began with commercial banking, including “deposits; offers checking account services; makes business, personal and mortgage loans; and offers basic financial products like certificates of deposit (CDs) and savings accounts to individuals and small businesses”. Rockland now offers investment management services to clients across eight offices in New England. Innovation Innovation has been highly prioritized by Rockland Trust since its inception. The bank adopted automobile banking in 1910 which led to its success is Massachusetts. In the spirit of bringing banking to the customers, Rockland prioritizes technological advancement of operations. This is demonstrated through the launch of their first ATM in 1980, website in 1996, and mobile banking in 2011. Adoption of mobile banking marked an important milestone for the institution, as increasingly “consumers expect digital services”. Rockland now offers “banking from any digital device: smartphone, tablet, and desktop PC, as well as mobile wallet services and Rockland Trust Business Online Banking”. These services aid in competing with bigger banks.

Rise of Financial Technology (fintech) in the Banking Industry With the rise in development and popularity of advanced, disruptive financial services technologies (i.e., “fintech”), banks big and small have been attempting to improve product offerings, customer experiences and operations. One of the areas of development include digital payments. Early Warning Services Founded in 1995, Early Warning Services seeks to solve problems attributed to identity authentication (e.g., synthetic identities) and fraudulent payments (e.g., forgery). More specifically, EWS is a “specialty consumer reporting agency” which compiles information on consumers. This information includes prior fraud history, account abuse, forgery, counterfeiting,

check alterations, paperhanging, check kiting, identity verification, and account owner authentication. The information collected is used to prevent fraud in payment transactions among EWS’s network of 2,300 financial institutions, government entities and payments companies. Early Warning was able to create this extensive network of partners due to its collaborative roots. The owners of EWS are “seven of the country’s most respected financial institutions- Bank of America, N.A., Branch Banking & Trust, Capital One, N.A. JPMorgan Chase Bank, N.A. PNC Bank, N.A., U.S. Bank, N.A. and Wells Fargo Bank, N.A.” The map shows the most popular banks for consumer accounts in each state in 2018. Many of the owners of EWS appear to hold significant market share in multiple states.

Most Popular Bank (by state)

This network allows data to be collected on consumers in the network, creating a speedy and efficient authentication process. Zelle Zelle, a US based digital payments network that launched in 2017 as the successor platform to clearXchange, has become the choice of multiple national banks to offer customers the option of transferring money from account to account, including peer-to-peer payments. These banks include Ally, Bank of America, Capital One, and Wells Fargo, to name a few of the 200+ financial institution partners. Partners in the network allow money to be sent to and from other partners. The adoption of Zelle by community banks such as Rockland would demonstrate the need to cooperate and standardize in certain service areas and to compete and innovate in others. Sources • • • • • • • • • •

https://www.rocklandtrust.com/ Ensign, Rachel Louise and Jones, Coulter (Mar 2019) https://www.wsj.com/articles/the-problem-forsmall-town-banks-people-want-high-tech-services-11551502885?mod=hp_lead_pos3 https://www.zellepay.com/partners-+ Keefe, Bruyette and Woods, Inc. Winter Financial Services Symposium February 14, 2019- Rockland Trust Investor presentations Independent Bank Corp. 2017 Annual Report Phillips, Lisa (Jan 2019) https://rebuildcreditscores.com/early-warning-services/ bank popularity map- https://www.bankrate.com/banking/most-popular-bank-in-each-state/ https://www.earlywarning.com/news/press-releases/2015/us-banks-unite-to-form-industry-leadingsecure-real-time-payments-network.html Adams, John (Jan 2016) https://www.americanbanker.com/news/early-warning-clearxchange-tacklethe-security-of-faster-payments https://www.economist.com/finance-and-economics/2019/03/18/fis-and-worldpay-agree-on-a-43bnmerger?cid1=cust/ddnew/email/n/n/20190318n/owned/n/n/ddnew/n/n/n/nNA/Daily_Dispatch/email&etear= dailydispatch&utm_source=newsletter&utm_medium=email&utm_campaign=Daily_Dispatch&utm_term=2019 0318

[case study questions below]

Case Questions 1) Given the above case study description, and your individual web-based research, what would you say if Rockland Trust’s primary value discipline? What evidence would you provide to justify your choice? 2) Given your answer to Question #1, what would your recommendation be to Rockland Trust’s senior leadership team regarding Zelle adoption?...