Surrendering Market Share to More Non-Bank Competitors

by. Steve Topper

In their ongoing desire to target more affluent customers the nation’s thousands of community banks and credit unions appear to be fighting over a diminishing piece of the consumer pie.

In fact, it’s the tiny sliver of pie left them by the nation’s four mega-banks.

Perhaps senior management at these financial institutions are choosing to ignore the barrage of media stories reporting about the hallowing out of the middle class due to an assortment of factors including misdirected government and Federal Reserve policies.

Bottom line, membership in the middle class is rapidly declining while the lower, or less affluent, class is gaining membership in droves.

You’d think that given this scenario, at least some community banks and credit unions would be rethinking their target audience instead of fighting over a smaller piece of the pie.

Instead, they choose to lose customers to a growing number of non-bank competitors.

I was reminded of this on Sunday while reading the local Sacramento newspaper.

The first story on the front page of the business section, top-of-the-fold, bears the title, “Auto-title loans drawing scrutiny.”

I was surprised to learn about a cottage industry of title loan companies, licensed in 21 states, trolling for business online and with radio and TV spots.  Treated by state regulators as subprime lenders, these companies cater to a growing number of consumers unable to obtain small loans from community banks and credit unions.

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