Richfield Bank delivers part-time to Minnesota seniors' doorsteps

Northwestern Financial Review, Mar 1, 2001 by Campbell, Katy

Offering banking services to residents of seniors' facilities is easier than ever for community banks in Minnesota, thanks to changes in the state's banking code last year. The suburban Minneapolis Richfield Bank and Trust, which helped lobby for the changes at the Capitol last year, is now reaping the rewards - about $1.5 million in new deposits in a sought after niche market.

Under old state law, a bank could only operate a part-time office in a housing complex if it operated a branch office in the same community. That was fine for banks in small towns, but it presented a limitation for Richfield Bank, which had few branches. So the $650 million bank, together with the Minneapolis-based Winthrop and Weinstein law firm, lobbied the legislature to change the law to permit a Twin Cities bank to open a part-time banking facility in a senior residence anywhere in the metro area.

Since the law was enacted last April, Richfield Bank's "easybanking" program has generated about $1.5 million in new deposits, said Dave Stavenger, senior vice president of retail banking operations. A dedicated bank unit has grown to include a manager and 11 fulltime bankers offering a complete line of financial services to seniors living in 25 independent and assisted-care facilities throughout the Twin Cities, Stavenger said. The bank is awaiting regulatory approval to set up shop at 11 more such locations housing seniors aged 55 and older. The hope is that each site will generate between $500,000 and $600,000 in new deposits to be economically viable, Stavenger said.

Seniors are generally regarded as desirable bank customers for a variety of reasons. Statistics show they average $3,000 more in checking account balances than any other age group, and they use four times as many retail banking services as the average customer, Stavenger noted, citing a study by author Michael P. Sullivan.

Richfield Bank, a 52-year-old hallmark of independent banking, has marketed its services to facilities housing seniors with $200,000 or more in assets and a 10- to 20-- year expected life span. Twice per week at each facility a banker is on duty in a shared office. Equipment is minimal, with Internet access allowing the banker to offer the same full complement of transactions and services as a customer would find at a regular fulltime branch. A small safe and a two-drawer file are the other amenities. Stavenger said the bank can open for business without even hanging up a sign.

Any resident of the facility, regardless of whether they are customers of Richfield Bank, may use the bank's easybanking services to, among other things, get checks cashed free of charge, or set up appointments with a trust or investment advisor. This free accessibility of services is not mandated, Stavenger said, but is a considered investment in the process of building relationships that earn new customers. History at Richfield Bank's pilot location in Burnsville proved that, within a year to 18 months, 23 percent of the residents were customers of the bank with deposits averaging about $15,000 per client, Stavenger said.

"Experience has shown me that when we take the time to listen to seniors' needs and offer solutions with personalized attention, they are willing to give us significant business in return," according to Rhonda Goff, assistant vice president and sales manager for Richfield Bank's easybanking service. But relationship building with seniors has brought its own challenges, as the seasoned bankers develop repeat customers at the sites they serve on a regular basis. One banker has undergone grief counseling after the death of a client, Goff said. Special physical needs of seniors also have to be addressed. The bank provides all specialists with training about deaf and hearing-impaired culture, and plans are in the works for training about Alzheimer's and dimentia.

Is there an end in sight to growth in this niche market? Stavenger doesn't think so, as long as the banking sites are economically viable. Demand is sure to be self-sustaining: As baby boomers begin entering their golden years, the Twin Cities senior population is projected to nearly double by 2020. The main resistance that Richfield Bank has encountered, Stavenger said, is the reluctance of some senior housing facility managers to consider using the banking service. The bank has learned to counter strategically by marketing itself as an amenity of the housing facility.