Banking on It - February 2000

Washington Mutual

Market’s dissatisfied customers are boon for new bank

by Kim Pryor

At first, the concept resembles an identity crisis: a bank designed to look more like a warm and friendly retail store with customer service representatives dressed in casual attire, play areas for children, and a sales area stocked with consumer-oriented financial products such as software, books and magazines. But this is no case of mistaken identity. It’s part of a bigger corporate picture that focuses on Washington Mutual’s plan to lure customers away from other financial institutions.

In April, Washington Mutual will enter the Las Vegas market when it opens 15 branches, with another five following soon after. The openings will create approximately 200 new jobs in Southern Nevada.

The Seattle-based bank has some impressive credentials. It is California’s second largest depository institution with a 17 percent market share and is the leading residential lender in California, Washington, Utah and Oregon. It has consolidated assets of $180.8 billion (as of September 30, 1999) and more than 2,000 offices throughout the nation.

Here, Bob Bond, Washington Mutual’s senior vice president and group manager, explains how the bank plans to compete in the Las Vegas market.

NBJ: Why is this the ideal time for Washington Mutual to enter Nevada?

Bond: With all the growth that has been going on there, a lot of companies want to get into the marketplace. We do well in markets that have big household growth. But also we found that a lot of people in Las Vegas weren’t happy with their existing relationships with their banks. We think we can show these unhappy customers a new way of doing banking. Also, Las Vegas has always been known for being business friendly, so we have the ability to come in and actually open 15, 20, 25 branches in a short time frame.

NBJ: Why do you think so many customers are unhappy with their banks?

Bond: We conducted a number of studies among residents in the Southern Nevada area and research indicated that nearly 25 percent of Las Vegas residents are unhappy with their present bank. In our surveys, we asked them about their satisfaction with service, we asked them about their bank’s products. What we heard more loudly in Southern Nevada than in our other markets was that people aren’t pleased with the level of service they’re getting. They feel like they’re getting nickled and dimed on fees. There’s just a general feeling of] discontent.

NBJ: How do you intend to show those discontented customers that Washington Mutual is different?

Bond: In all the markets we’re in, our free checking is a very definite point of differentiation for us. I think you can bring them in with that free service, but keeping them is the magic. Customers don’t just want something for free; they want to deal with friendly people, too. So getting them in the door is step one, keeping them is step two.

NBJ: With all the competition, keeping the customer is no easy task. How do you plan to retain your customers once you get them in the door?

Bond: We actually shop the branches to make sure they’re doing the things we think it takes to provide high quality customer service. We send out customer surveys, we train, we hire people not because they can count, but because they come across as delightful people.

We also offer a wide array of products, everything from free checking to jumbo home loans to no surcharge ATMs. But instead of forcing customers through one channel or the other, saying, "You have to use the electronic means or we’ll charge you if you come into the branch," we really encourage the customer to use whatever channel happens to be appropriate for their situation. We have all the pieces and we don’t want to force customers through one channel or the other. At different times, customers need [access to] different channels.

NBJ: Initially, you’re opening 20 branches within one market, which seems like a lot. Why not take a more cautious approach in the beginning?

Bond: By opening a large number of branches at one time, much like a franchise, we hope to gain market share quickly while maximizing marketing and other start-up costs. Again, we found that we can drive a lot of business in the doors [by offering our] free checking product. Then, with the customers in front of us, we can take the vast array of other products that we have, cross-sell them, and give customers opportunities to do other [financial] business. We think that we can get a migration into Washington Mutual in a hurry.

NBJ: Many say Nevada’s banking market is oversaturated with too many banks and not enough customers. How will you attract new customers in such a climate?

Bond: From what I’ve seen, I don’t think that’s necessarily the case. We’re locating many of our branches in outlying areas, such as the edges of Summerlin and Green Valley, where a lot of housing is going up in a hurry. These areas have new shopping centers and new traffic centers, but they don’t have a lot of financial institutions. People typically like to do business around their home or around their neighborhood, so some of the banks that are downtown have a hard time hanging on to some of their customers as people move to the outskirts. And there are so many people moving into the area. We do a good enough job on our products and our services that we can get the lion’s share of the people moving in.

NBJ: Speaking of people moving in to the state, will you bring in a large share of employees from other markets or will you hire locally?

Bond: We’ve hired about half of our Las Vegas managers from Washington Mutual internally and about half of them from the local community, so I think it’s a great mix. We look to have the vast majority of our other employees from the local area.

NBJ: In addition to tapping into the local workforce, do you have any plans to contribute to the community?

Bond: We give our employees four hours of paid release time a month to do volunteer work. And for every checking account that’s opened, we donate a dollar to local schools. Last year alone, we contributed approximately $1 million or more from all our branches. The dollars that are raised in the community go back to that community. We’re already planning different charitable contributions and we’ve met with school superintendents and others in the areas of affordable housing and education, our two top priorities.

NBJ: Once you’ve established a presence in Las Vegas, any plans of moving up north?

Bond: I think that it makes sense after we get our foothold here in Las Vegas to certainly look at Reno. We can’t specifically say where we’re going to go or where we won’t go, but it makes sense that in the future we’d look toward the Reno market.