[OUTLOOK]Wanted: customer-friendly banks

"When do you open?" a group of us asked. "We," said a Commerce Bank official, "begin business at 7:30 a.m."

I was on a business trip to New York several weeks ago. A group of us were out for a morning walk when we discovered a bank open. We went inside, along with several customers, to find that the closing time was at 8 p.m. In New York, where the tradition of the five-day workweek is embedded deeply, the bank was open for business early in the morning. It opened on the weekends as well, remaining open from 7:30 a.m. through 6 p.m. Saturdays, and 11:30 a.m. through 4 p.m. Sundays.

The bank's manager, a woman neatly dressed in a suit, welcomed our group. "New York is a city that never sleeps," she said. "The only exceptions are the banks that close at 3 p.m. or 4 p.m. each day. Our business hours have been set so that businessmen can come in before or after work. Those who can't spare time during the week can walk in on the weekend."

Vernon Hill II, founder and chairman of Commerce Bank, organized the bank in 1973 in Cherry Hill, New Jersey, as a small neighborhood bank. Mr. Hill did not aim for his bank to become a national one that managed large bulks of cash, but a customer-friendly one, like the Wal-Mart chain stores or the Starbucks coffee shops. So, he adopted unprecedented and unheard of hours. He made customers' installment deposits, small-business and home loans the bank's core businesses. He drastically eliminated all types of commission fees. He even attempted drive-through banking, as customers do at McDonalds. In sum, he aggressively carved deep niches in the banking industry. In expanding the bank, Mr. Hill did not seek the fast and quick road of mergers and acquisitions. Rather, he sought an independent expansion by increasing the number of a single bank's branches.

Commerce Bank, which has 200 branches at the moment, expects to increase to 400 by 2005. Bank officials said that the bank's internal marketing strategy of granting $50 for proposals by employees to upgrade service contributed to the overall expansion of the business. By concentrating on customer-friendly service, Commerce Bank has spent more than other banks in operations expenses. But since 1995, the number of its customers has began to grow explosively, raising the value of the company's shares and thereby bringing bigger profits. How much bigger? While the value of shares of the top 500 U.S. firms in the past 10 years rose 13 percent on average, Commerce Bank has seen the value of its shares leap 36 percent.

As the word spread about the bank's business management style, major U.S. media organizations, such as the Wall Street Journal and the New York Times, rushed en masse to laud Commerce Bank as the "No. 1 American Bank." Against the bank's illuminating growth in the past two decades plus, the American business community and American customers are keenly watching whether the bank with operating networks in five eastern U.S. states will continue its great strides of success. Or will it be pushed aside by consolidation in the industry?

Commerce Bank's growth story reminded me of the whirlwind over adopting the five-day workweek in Korea, where all banks have unilaterally adopted staying open only on weekdays. The Korean government, business and labor are engulfed in the pros and cons war of adopting the five-day workweek.

Commerce Bank's blazing road to success came by seizing on a change in perception that banks must adapt to the customers' needs, that customers do not have to merely accept a bank's policies. If the customer needs it, the bank will be willing to stay open morning to evening, 365 days. The Commerce Bank has a parallel on the West Coast of the United States. U.S. Bank is attracting customers by keeping its 250 branches in 18 states open for business all week.

Korean banks are harboring a dream of becoming "world-class retail financial institutions," through mergers and acquisitions. Through consolidation, they are looking toward the international market, and are poised to aggressively compete in the global financial market. At this critical juncture, it is time that our banks should seriously ponder business strategies that will attract customers.

These strategies should be ones that truly distinguish the local banks from the competitors. And the banks should attract business from the customer's point of view, not the bank's point of view.

I anticipate that one day there will be a Korean bank that outpaces Commerce Bank in convenience and customer-friendly service. It will be a bank where the customer is treated as royalty.

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The writer is a emeritus professor of international relations at Sejong University.

by Kim Joung-won