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A Balancing Act
Distributors who invest time in the merger-laden financial industry recognize the risks, but often find ways to become assets to their clients.
BY SUSAN KEEN FLYNNFORM, Dec. 1998
At the end of May, a credit union in North Carolina rolled out an online banking program, and the distributor who serves the bank was happy. Yes, he was happy. Sure, online banking often means the demise of cash-in tickets, deposit slips and other paper products. But Mike Rogers, president of The Resource Company Inc. in Charlotte, N.C., focused on the opportunity for new printing sales rather than the prospect of losing old ones.
"Credit unions are going through a lot of changes," says Rogers. "They're trying to act more like banks, so they're offering more services." And when credit unions introduce new services to customers, Rogers says it's a prime time to sell marketing materials to them. The credit union that implemented online banking turned to Rogers to provide 4-color posters, a banner, fliers and mailing pieces promoting its new service to member customers-5,500 postal employees.
The credit union set up a computer in its lobby to demonstrate its online banking program, which it calls "Postmaster." Rogers provided a 4 x 6-foot vinyl banner to hang above the computer. The bottom resembled an algorithm, which gradually faded toward the top of the banner. The name of the online banking program was displayed at the top in hand-cut vinyl letters glued to the banner.
Rogers also supplied posters promoting the Postmaster program. The credit union displayed the posters over teller stations and in its doorway. In addition, he provided a direct mail campaign, including outgoing envelopes, fliers explaining the online banking program and registration forms. The Resource Company handled the mailing to the credit union's members.
Rogers says he gained this marketing project because he was a trusted vendor for the single-location credit union. He provides its statements and handles its statement processing. He prefers working with small credit unions and community banks rather than large financial institutions, which he says "look for lifetime contracts that offer little profits." In an era when large banks are buying other large and medium-sized banks-such as the merger of NationsBank and BankAmerica on Sept. 30 to create the monolithic Bank of America with $572 billion in assets-many distributors agree with Rogers. Community banks, although not safe from merger activity, often present more opportunities for distributors to provide a variety of products and services and make a healthy profit.
"Although anybody can sell to banks, if you don't understand the industry you're probably just selling products, not building relationships."
Bob Barron
President, Bear Graphics Inc.
Sioux City, Iowa"We don't do business with the big [banks] because you can't make any money," says Bob Barron, president of Bear Graphics Inc., Sioux City, Iowa. "We defer that business to the major directs....Let everybody else fight for the big business." His distributorship sells to 3,000 community banks nationwide. Barron says these small to medium-sized banks purchase "every consumable business product they use" from Bear Graphics, including forms, ATM supplies, promotional products, magnetic media, coin wrappers and money counting machines. "Even small banks can be large customers because they buy so much," says Barron.
Financial Systems Inc., a distributorship in Bloomsdale, Mo., also targets community banks, primarily in rural areas. The company's 10 sales reps sell a variety of products to about 1,000 banks. Larry Kist, co-owner of Financial Systems and a sales rep, admits mergers have changed the banking industry in the 23 years his distributorship has operated. But industry consolidation hasn't exhausted his business with banks, which accounts for 80 percent of Financial Systems' sales. "We've seen a trend toward big holding companies buying banks," says Kist. "But more community banks are sprouting up, too."
Kist says it's not uncommon for former executives from a bank that was bought to obtain a charter and open a new, small bank months after the acquisition. According to the Federal Deposit Insurance Corporation, 200 new bank and savings institution charters were granted in 1997, an increase of 27 percent from the previous year. Although the total number of banks and savings institutions has declined since the late 1980s, due in large part to mergers and acquisitions, the number of new banks and savings institutions has steadily grown since 1993. "There will always be a need for community banks, especially in rural areas," says Kist.
Today, there are about 11,000 banks and savings institutions and 12,000 credit unions in the United States, according to the FDIC. And the buzzword that turns these keepers of the cash into customers is service, say distributors.
"I don't simply sell printed pieces," says Rogers. "I try to distinguish what the service is-give them graphic resources, database management and mailing services. The printed piece is ancillary."
Lending a Helping Hand to Lenders
One service some distributors offer is statement processing. The Resource Company receives magnetic tapes or files via modem from financial institutions detailing consumers' monthly account activity. The distributorship then manipulates those files, prints statements on a laser printer, inserts the statements in envelopes and mails them. For one customer, the distributorship also adds a quarterly newsletter to the mailing. The newsletter includes information on services the bank offers and a letter from the CEO.Fiserv Forms & Graphics, a distributorship headquartered in Bellevue, Wash., operates a laser production facility. The facility, which houses mailing equipment and several Xerox printers, generates statements, notices and loan coupon books with up to 60 coupons and covers. Financial institutions electronically transfer files to Fiserv, which manipulates the files and prints the statements or notices. Then Fiserv either mails the pieces, ships the documents back to the bank to mail or ships them to a processing site where cashed checks are inserted into an envelope with the statement and mailed.
Inventory management is another common service offered by distributors. "We charge for printing, but I believe what we really sell is distribution and warehousing services," says Terry Allen, Fiserv's Southwest regional manager based in San Diego. Fiserv operates five warehouses-three in the West, one in Milwaukee and one in Houston. It uses company vans to deliver local orders and relies on couriers and UPS for long-distance deliveries. Fiserv sets up regular delivery schedules with financial institutions and offers rush services. Offering inventory management helps the distributorship penetrate accounts. "Our ultimate goal is to print, stock and distribute everything for them," says Allen.
Bear Graphics provides banking customers with on-site inventory management. "We add value to the products we sell by visiting clients on a regular basis," says Barron. More importantly, though, sales reps become experts in the banking industry by spending so much time with customers, says Barron. "We understand how their business works," he says. The distributorship's goal is to become a resource banks turn to for industry information. For instance, Bear Graphics provides banks with the latest information on security documents, statistics on fraud and information on due diligence.
Tracking the banking industry can be a daunting task for a small distributorship, so Bankers Group Purchasing hired a law firm in Boston to follow banking legislation. The law firm informs the Waltham, Mass.-based distributorship when legislation has changed, then Bankers Group Purchasing informs clients. "Banks can't keep up with all the changes in the law that affect forms, so we do it for them," says Richard Parece, owner of Bankers Group Purchasing.
Banksystems Marketing Inc. also puts the power of knowledge to use to serve customers. But for this Eagan, Minn.-based distributorship, it is mechanical know-how that wins banking clients. The company sells stock paper, ribbons, receipts and ATM rolls to about 500 banks. In addition, the distributorship remanufactures banking equipment, such as NCR and Diebold automatic teller machines. Rather than buy new equipment, banks with low business volume or ones that offer ATMs solely as cash dispensers often opt to remanufacture existing equipment-a service Banksystems Marketing is pleased to provide. "The equipment knowledge puts us ahead of our competitors," says Curt Goke, director of media marketing for the distributorship.
Providing Capital Ideas
Although providing value-added services is critical to success in the financial marketplace, the industry still relies on distributors to supply core products-checks, statements, ATM rolls, loan documents and other printed products. The list of products that banks use is long and changes frequently. "If you're going to succeed, you better constantly be looking for new products," says Kist. One area he and other distributors have cashed in on is promotional products and printing.Financial Systems helps banks promote their kids and senior citizen clubs. These clubs offer special services to specific segments of the population to gain more business. "Seniors and kids are attractive to banks looking for deposit dollars," says Kist. "Banks need deposit dollars to makes loans, and loans are where the money is."
Targeting kids isn't child's play, says Kist. Several rural banks he serves sponsor kids clubs that send members newsletters, host Halloween and other holiday parties, mail members birthday cards and more-all in an effort to gain the dollars of young consumers. "Kids today have more money than we did when we were kids," says Kist. "Families are smaller, and grandparents, aunts, uncles and godparents are better off. Kids get savings bonds and have savings accounts." To help promote kids clubs, Kist supplies balloons, cardboard coin savers, trick-or-treat bags and school items, such as pencils and pouches, with banks' names on them.
At the other end of the lifeline, Kist provides promotional products for banks' senior citizen clubs. One popular item is a 3 x 5-inch mini zipper bag, similar to a deposit bag. Seniors use the bag to hold money, credit cards, golf tees, golf markers and more. Banks also purchase household items with their names and logos on them as giveaways for seniors. Kist has sold custom address books, cooler cups and note pads.
Ad specialties have a universal appeal. And in a competitive industry in which financial institutions battle for deposit dollars, promotional products serve as implements to help banks win the war. An ideal giveaway is often an item that promotes the bank but is practical as well. Bear Graphics provided one Midwest bank with leather work gloves imprinted with the bank's logo to hand out to farmers when they established credit lines. Several banks purchase counterfeit detector pens from Financial Systems. The pens, used to detect counterfeit money, have a specially formulated ink that appears as one color if a bill is authentic and another color if it's fake. One of Kist's bank customers gave the pens to commercial clients that are at high risk for obtaining fraudulent money, including a fast food chain located on a highway.
Marketing pieces also provide an avenue of opportunity for distributors. "We figure banks spend about $1,000 on printing for every $1 million deposited," says Allen of Fiserv. "Of that figure, more than 50 percent is spent on marketing materials." Fiserv often provides financial institutions innovative marketing pieces with a theme to promote new programs.
When a credit union introduced an automobile loan pre-approval program to customers, the distributorship supplied pieces for a direct mail campaign, including 8 1/2 x 11-inch sheets printed on a coated 10 mil plastic. The sheets, which are Z-folded, display a 2-color graphic of a car dashboard and glove compartment. The top and sides of the glove compartment are die cut so recipients can "open" the glove compartment (or lift the panel) and see inside. Beneath the panel is a personalized pre-approved loan card, which credit union members use to obtain car loans. The promotional piece also includes details about the loan pre-approval program.
The Financial Statement
The condition of the financial market can't easily be summarized in a concise statement for distributors to analyze its assets and liabilities. Industry mergers certainly present one of the biggest challenges. "You can work for a couple of years to get a customer, sell to them for 10 years, then all of a sudden they're bought and you've lost the business," says Kist. Despite merger activity, Kist and others find ways to succeed. "I have a lot fewer customers today than I used to," says Kist, "but thank God I'm selling more products to them." And those who focus on the market note a few simple benefits of selling to financial institutions: "Banks are good customers," says Barron. "They buy lots of items, and they pay their bills on time."Susan Keen Flynn is managing editor of FORM Magazine.
Thanks to Web Graphics, Glens Falls, N.Y., for assistance.
Fast Facts About the Banking Industry 
There were 9,143 commercial banks with assets totaling more than $5 trillion in 1997.
Source: Federal Deposit Insurance CorporationDuring 1997, there were 599 mergers and acquisitions involving commercial banks. From 1990 to 1997, there were 4,063 mergers and acquisitions.
Source: FDICThere are more banks per citizen in the United States than in any other country.
Source: American Bankers AssociationThere were 200 new bank and savings institution charters granted in 1997, the highest number this decade and 43 more than the previous year.
Source: FDICDuring 1996, there were 10.7 billion ATM transactions, an increase of 10 percent from the previous year. ATM usage almost tripled between 1986 and 1996.
Source: Bank Network NewsEnd User Perspective
The Chase to Install E-Forms
Like most financial institutions, Chase Bank of Texas is a heavy forms consumer. It uses more than 3,500 forms. In 1991, the Houston-based bank began converting paper forms to electronic ones on a stand-alone basis. In 1994, the bank started a statewide electronic forms program. Today, bank employees have access to more than 300 electronic forms on 8,500 desktop systems."It's important for us to stay on top of the technology curve so we can provide our customers better service," says Kevin Shaw, electronic forms coordinator for Chase Bank of Texas. He says electronic forms save the bank time and money. For instance, one of the documents that the bank converted to an e-form is its corporate trust work order. Previously, it was a 5-part carbonless form with marginal words and press numbering that cost the bank 49 cents per form. Bank employees typically spent about a half hour filling out the form, says Shaw.
The corporate trust work order was converted to a fill-and-print electronic form that generates a unique number and has a single routing line. After bank employees print the work order, they copy it on colored paper to create parts two through five for their records. The electronic version of the work order costs the bank 29 cents per form to use, says Shaw. It only takes five minutes to fill out because many of the orders are duplicated month to month. A previous order's data can be retrieved, and the applicable date fields changed to the current month.
Shaw says the bank saves $600,000 a year-or about $2,000 per form-with electronic forms. Chase Bank of Texas adds about two e-forms to its repertoire each week, most of which were cut sheets prior to the conversion. Frequently used e-forms include internal expense reports and employee appraisals, funds transfer requests, ATM card applications, account maintenance requests and other consumer banking forms. Most of the e-forms rely on fill-and-print technology: Bank employees call up the form on screen, fill in the data and print them out on laser printers.
Chase Bank of Texas uses a popular electronic forms software to design and run its electronic forms. It can expand its base up to 12,000 users, but currently runs e-forms on 8,500 computers. The production server in the bank's Forms Management Department holds an electronic catalog of all its e-forms, and users can access them by form number, name, or type (fill-and-print or print-on-demand).
Casa Dulce Casa
A North Carolina distributor provides printing for Hispanic housing fair.On the afternoon of Aug. 29, 10,017 satisfied people left the First Union Atrium in Charlotte, N.C.-10,000 attendees of the Latin American Housing Fair, 16 executives from the firms that exhibited at the fair and one distributor who had provided all of the event's promotional materials.
The Latin American Coalition selected Mike Rogers, president of The Resource Company Inc., a distributorship in Charlotte, to supply promotions for the housing fair. The fair, sponsored by the Community Development Corporation and several banks and mortgage brokers, was held to educate minorities about options for buying homes, obtaining home loans and managing mortgages. Funds for the fair's marketing materials were donated by local financial institutions, including First Union, NationsBank and Wachovia.
All of the materials supplied by Rogers incorporated the same colors (blue and yellow) and a graphic of a house. They were printed in Spanish and English. The first piece Rogers provided was an 8 1/2 x 11-inch yellow flier printed in reflex blue. In mid-July, more than 20,000 fliers introducing the fair to the Latin American community were inserted in La Noticia, a weekly Spanish newspaper.
The following week, Rogers provided 1,000 4-color posters promoting the housing fair. The 12 x 18-inch posters were printed on an Indigo E-Print® 1000 digital offset color press. They read, "Realize your dreams of owning a home. Come to the Latin American Housing Fair." They also included details about the fair and the names and logos of the sponsors. Paper delivery people placed the posters on newsstands and racks where they distributed stacks of La Noticia. The next week, La Noticia ran an advertisement promoting the housing fair.
Two weeks before the event, Rogers supplied a 4 x 12-foot blue and yellow banner to hang outside the First Union Atrium, where the event was held. It had the name of the fair printed in Spanish, with the graphic of the house on one side and the sponsors' names on the other side. One week prior to the fair, Rogers provided and mailed 2,500 4-color post cards to local dignitaries, including Charlotte's mayor, the county commissioner and the governor. One side of the post card, which served as an invitation, was printed in English; the other side was printed in Spanish.
Rogers also provided items used the day of the fair, including yellow and blue T-shirts worn by event staff and registration pads for attendees to fill out. Even after the event, Rogers' work wasn't complete. Using information on registration forms, he created a database of attendees. Sponsors and La Noticia received a copy of the database for marketing purposes. In addition, the Latin American Coalition will use the database when it promotes next year's Latin American Housing Fair.