Helping Community Banks Attract Deposits and Retain Customers

By Tom Drunsic

Lockbox processing is one of those cash management services that community banks are asked for from time to time, and it is a service community banks need to have in order to compete with the larger banks.

We find that often a community bank will be faced with a situation in which a commercial customer will want to do business with them, but one of the things that they will ask for is a lockbox service – and if the bank doesn’t have it, they are probably going to have to say no to the customer and the deposits they will bring.

Lighthouse Payment Services did a study in 2005 where a community bank had seven lockbox customers, each generating over $500,000 in deposits for the bank. The average bill for the lockbox service to the customer was only $175 per month! These seven customers would not have been customers of that particular bank if that bank did not have a lockbox service – so you can see the potential here.

Lockbox processing also helps with customer retention, because when a customer sets up a lockbox service, it can be difficult to move that service. Once the customer has told all of their customers to mail payments to a specific location, they are really reluctant to change that location. It’s one of the services that, once you sell it, you are going to keep that customer for a long time.

Community banks are constantly challenged by today’s regulatory environment, but they are also challenged by all of their competition. Lockbox services can help position them a little better to compete with the larger banks, who often offer the service. Any community bank can get a lockbox service, and they don’t have to pay a thing for it, until they actually have a customer using the service. It’s one of the best services a bank can offer, because it can be positioned and put in place, and when you have a customer that comes looking, you’re ready with a solution.

Tom Drunsic is CEO of Lighthouse Payment Services Inc., a Massachusetts-based lockbox provider.