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Financial
Finding a Future in the Financial Market
The number of banks has decreased; competition has increased. But top-notch service and high-tech products can still put money in your bank.
BY KATIE SWEENEYFORM, Dec. 1995
When Trans Financial Bancorp Inc. recently converted to imaging, it meant increased efficiency, savings in postage costs and faster check processing for the bank. For Kentucky Lithographing Co. Inc., a distributorship in Louisville, Ky., it meant a bigger profit. "It allowed us the opportunity to basically get in on the ground floor and help them through the process," says Norman Longest, secretary/treasurer of Kentucky Lithographing, adding that he and other company officials sat in on some meetings with the bank's imaging equipment suppliers. "It allowed us to acquire more of the business. It kind of locks you in."
Longest says every form had to be redesigned to fit with the imaging system. With most imaging systems, banks no longer send checks back to customers. Instead, customers receive copies of the image of each check, printed on 81/2 x 11-inch blank white paper. The sheets are 3-hole punched, and the bank provides binders so customers can store their check copies easily. Kentucky Lithographing started selling statement binders and blank paper for image statement rendering. In addition, the distributorship redesigned forms using drop-out inks and pastel colors for certain portions that did not need to be picked up by imaging equipment.
Imaging isn't the only technology that can lead to new business. Longest says Kentucky Lithographing recently began working with Trans Financial on a direct order entry system, which will allow bank officials to place orders via modem. This system will reduce paperwork and the chance of error, as well as speed up the order process, he says. In addition, he thinks it will help lock up the bank's business. Once the system is set up, it will be easier and more cost-effective for Trans Financial to stay with Kentucky Lithographing instead of going through the process again with another vendor, he says.
Fewer Banks, More Competition
Technology is just one way distributors are surviving-even prospering-in a financial market that many say has become ultracompetitive in the past few years. One reason for the increase in competition is the decrease in the number of banks. According to The New York Times, there were five mergers among the top 50 banks in the first eight months of 1995. A study by Deloitte & Touche predicted that half of the nation's 59,000 bank branches will close over the next 10 years, The Times reported.Distributors who specialize in selling to small banks say the mergers have been particularly painful. "I used to do business with a lot of little banks, until all these consolidations and buy-outs," says Folger Koontz, owner of First Graphics Inc., a distributorship in Albemarle, N.C. Koontz says he sells to one bank with 30 branches, but he has diversified into other markets. Richard Elmore, president of Data Forms of Charlotte Inc. in Charlotte, N.C., says he sells mostly to small banks, although he sells some items to larger banks. "I think the financial market, especially the large banks, is as competitive a situation as you're ever going to get in," he says.
Brad Quoyeser, president of Quoyeser Inc., a distributorship in Lafayette, La., agrees that it's been a rough ride in the financial market in the past few years. "First we went through the period where the federal government was closing so many savings and loans," he says. "That was quite a traumatic period. Now we're going through consolidations. You can well understand the pressure that's arisen in the industry." Quoyeser says one of his bank customers recently told him that a minimum of eight sales reps call on him every month. "And this is a $22 million bank in an out-of-the-way location," he says. "In the past, [the bank] only had two salesmen calling on it-our firm and one other company. Everybody's after the same piece of the pie."
But the news isn't all bad. Palmer Downing, president of Data Source, a distributorship in Jackson, Tenn., says that although he's lost some business when small banking customers have been bought out by large banks, he's seeing a new trend-small banks buying other small banks. "They're trying to protect themselves," says Downing. Small distributors have a better chance of picking up new business in this kind of an acquisition, he says. For example, one small bank he serves recently bought three small rural banks. Now Data Source is providing forms for these banks as well. "It made me feel like it was the good old days again," he says.
Taking Technology Into Accounts
Another way Downing has picked up new business is by keeping on top of the latest technologies, especially imaging systems. Many banks, particularly small banks, are converting to imaging systems for such functions as statement rendering, storage of check images, and electronic filing of documents such as loan agreements and signature cards, says Jimmy Sawyers, a financial institutions consultant for Reynolds, Bone & Griesbeck, CPA, a Memphis, Tenn., consulting firm. "[Imaging] is growing more rapidly in community banks," says Sawyers. "They have been able to implement it more effectively than larger banks." The higher transaction volumes at larger banks make it more difficult to implement imaging systems, he says.Downing says two of the banks he serves, both of them relatively small, recently converted to imaging. This meant more business for him because every form the bank captures digitally needed to be redesigned to be compatible with the new system. For example, the bank's teller tickets had to be redesigned because bank officials wanted only the ticket's dollar amount and MICR number to be stored. But other information, such as the teller number, still needed to be printed on the ticket so employees could read it. Data Source designed a new form that lists some data in a red or black screen so it will not be picked up by the imaging system.
Imaging also creates opportunities to sell new products. Data Source supplies 81/2 x 11-inch blank paper for image statement rendering. The sheets sometimes include the bank's logos. Downing says he hopes to begin supplying statement binders soon. In addition, Data Source sells Tyvek(r) envelopes, which the bank uses to mail the statements to commercial customers, who often receive 50 or more pages of check images each month, he says.
Kentucky Lithographing Co. Inc. makes use of a Xerox 9790 variable high-speed laser printer to do work for some financial customers. Secretary/ Treasurer Longest is part owner of another company that owns the printer, so the distributorship has access to it. He says Kentucky Lithographing has used the machine for training manuals, short run cashier's checks, money orders, direct mail letters and many internal bank documents. The machine prints a page at a time, can do graphics and collates on the run. "It's very versatile," says Longest. "There are no plates, no ink, no anything. It's just information supplied from a disk."
Many financial institutions also are considering using electronic forms. Richard Lewis, senior buyer at AmSouth Bank, a Birmingham, Ala.-based bank holding company with banks in four states, says skyrocketing paper prices may encourage bank officials to consider converting to electronic forms sooner than they'd expected. "There's a big push toward automation and electronic forms," says Lewis, who buys forms from regional manufacturers, national manufacturers and independent distributors. Within the next year, AmSouth plans to print various forms, such as loan notes, on-demand at teller locations. Lewis says electronic forms are ideal for loan notes because they change frequently and then have to be reprinted and redistributed. "It's usually a hassle because we always have some in stock," he says. Software will enable tellers to fill the notes in on screen and then print them as needed.
Matt Krueger, creative services specialist at the University of Wisconsin Credit Union, says the credit union, which is based in Madison, Wis., and has eight branches in four cities, also is starting to use electronic forms. For example, the credit union formerly bought printed deposit rate cards. Now the form is called up on the computer system and printed on-demand, says Krueger. And it no longer prints fax cover sheets because it can fax directly off the computer with its new system.
"Service, Service, Service"
Quoyeser says there's only one way to survive and prosper in the financial market: "Service, service, service. You have to do what your competitors won't do or aren't capable of doing." He says this has helped his customers remain loyal even as other sales reps continually call on them. Bill Thomas, CFC, assistant vice president and document manager for Bank of Hawaii in Honolulu, says service is a key factor for him in choosing a vendor. He looks for vendors who can provide routine forms management services and have the infrastructure to provide services for branches in 10 different time zones. Bank of Hawaii buys from a large manufacturer. Independent distributors in Hawaii don't have the infrastructure to provide all the services the bank needs, he says. "If they did, I would consider them," he says, adding that he is happy with his current vendor.Quoyeser says some branches of larger banks are becoming more open to the idea of using local distributors, at least for some items. "Even as these consolidations are coming on, the regionals are finding that mass distribution is not necessarily the best thing," he says. Officials at branches of some larger banks already have inquired about Quoyeser's services, he says, and a purchasing agent from one large bank recently requested a tour of the distributorship's 30,000-square-foot warehouse and office complex. Officials soon will realize it's beneficial to have a local company provide some of their products and services, says Quoyeser.
For example, a branch of one large regional bank recently enlisted Quoyeser to provide 200 coin boxes for quarters. The bank had been waiting two weeks to get the boxes from its supplier, a national vendor. The branch operations manager called Quoyeser, who had the boxes delivered in a half hour. The bank has since been using Quoyeser for its weekly orders of coin boxes. Although he knows he's not likely to win an entire contract for a large bank, one small order often can lead to other small orders, he says. "[Distributors] are going to have to earn the respect of the regional banks to regain some of the business we've lost," says Quoyeser, adding that he's optimistic about the future of the financial market. "I think it's going to turn," he says. "I really do."
Katie Sweeney is assistant editor of FORM magazine.
Thanks to the following for assistance: Falls Cities Printing, New Albany, Ind.; Kansas Bank Note Co., Fredonia, Kan.; Richard White Co., Gastonia, N.C.; and Victor Printing Co., Sharon, Pa.
Some branches of larger banks are becoming more open to the idea of using local distributors, at least for some items.
Ben Franklin Gets a Facelift
Recently, national attention was focused on counterfeiting and security documents as the U.S. Treasury Department unveiled its new version of the $100 bill, a greenback that's loaded with new security features.
Portrait: Ben Franklin's picture has been enlarged and moved off-center, providing room for the watermark and security thread. Added detail in the design makes it harder to duplicate.
Concentric Fine-Line Printing: A series of fine lines is used in the background behind Ben Franklin's portrait on the front side of the bill and behind Independence Hall on the reverse side. The lines are difficult to reproduce with color copiers, scanners and other technologies, according to the Treasury Department.
Watermark: A watermark on the right front side of the bill depicts Ben Franklin. The watermark is visible only when the bill is held up to a light, and it does not reproduce when copied or scanned.
Security Thread: A polymer thread is embedded vertically in the paper and indicates the bill's denomination. The words on the thread can be seen only when the bill is held up to a bright light, and they do not reproduce on a scanner or copier. The thread glows red when held under an ultraviolet light. In the old $100 bill, the security thread appeared only on the left side of the note. In the new version, the thread is in a unique position in each denomination in which it is used.
Microprinting: Microprinting is text printed so small that it appears as a screened line and is visible only with a low-powered magnifying glass. It becomes illegible when photocopied or scanned. Although this feature was included in the old version of the bill, in the new note it is found in two places on the front. "USA 100" is microprinted within the number in the lower left corner, and "United States of America" is microprinted on Ben Franklin's lapel.
Color Shifting Ink: This ink, supplied by SICPA Ink Systems Corp., Springfield, Va., changes color when viewed from different angles. For example, the ink looks green when viewed straight on, but changes to black when the bill is held at an angle. The ink is used to print the number "100" in the lower right corner on the front of the bill.