Dr Jeff Cornwall

Bank merger mania is back. Generally, this is not good for their small business customers. Mergers are pursued for efficiency, and efficiency often leads to less personal service. A recent survey of small business owners reported over at Inc.com found the following:
“According to a recent survey by Greenwich Associates, 30 percent of small businesses (those with annual revenues between $1 and $10 million) and 23 percent of midsize businesses (annual revenues of $10 to $500 million) said that merger rumors concerning the banks where they do business would cause them to consider reducing future levels of banking business with them. The reason generally given was an expected decline in service quality.
“Among their quality concerns, 53 percent of the small businesses surveyed believed a merger would have a negative impact on their established relationship manager performance, making it the most cited area.
“The area midsize companies felt would be most affected was their banks’ responsiveness to information requests, with 50 percent saying they felt this area of performance would be hurt.”
The good news, which we recently discussed here at this site, is that there are many new community banks starting up in the wake of the bigger banks merging.
Not all mergers have bad outcomes for small business. When smaller community banks merge or banks with a more regional presence come together the outcome can be a stronger bank that can better serve the needs of a growing company. This happened when a regional bank we had moved our business to merged with another regional bank. We saw no change in service and a better ability to meet our expanding needs as their customer.
Changing banks can be disruptive for a small business, so take time to see what changes occur over the first six to twelve months post merger. If things start to change for the worse, remember what a former partner of mine once liked to say: “There’s a bank on every corner. One of ’em will be smart enough to work with us.”