Citizens Bank, which since 1996 has gone from Rhode Island’s second-largest
bank to the overwhelming market leader, now has 43.7 percent of the state’s
deposit market, according to a PBN analysis of new Federal Deposit Insurance
Corporation figures.
The June 30 data, released last month, shows Citizens’ deposits grew by 13.7 percent from June 30, 2003, to last June 30, while the Rhode Island market as a whole (excluding MetLife Bank, which only has a processing center here), grew by 8.4 percent.
Fleet Bank, meanwhile, grew by only 4.2 percent. As a result, while Citizens’ market share grew by 2.1 percentage points, Fleet’s shrank by 0.9 points, to 23 percent.
Rhode Island's Market Has Changed. Developers, Builders, Investors and Sellers Must Change With It.
By Emilio DiSpirito IV License Partner | Engel & Völkers Oceanside Leader | The DiSpirito…
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The FDIC figures don’t necessarily paint a pretty picture for Sovereign Bank, Rhode Island’s third-largest institution. The Pennsylvania-based bank, whose market share peaked in 2001, at 13.3 percent, continues to lose ground, with a 2.3-percent drop in total deposits and a 1.1 percentage point drop in its market share, to only 9.9 percent.
The Washington Trust Company and Bank Rhode Island, on the other hand, both of which have been reporting strong gains this year, had an 18.5-percent and 13.2-percent increase respectively in their deposits as of June 30, the FDIC figures show.
Washington Trust remains the state’s fourth-largest bank, now with 6.8 percent of deposits, while BankRI is fifth, with 4.7 percent. BankNewport grew its deposits by 3.6 percent, and remained in sixth place, but lost 0.2 percentage points on its market share.
Rhode Island is by far the most concentrated banking market in New England, with more than $2 of every $3 in one of the top two banks. In Connecticut and Massachusetts, Fleet leads with slightly smaller market shares than it has in Rhode Island, and the No. 2 bank has less than 13 percent. The region’s second-most concentrated market, New Hampshire, has leader Providian with 31 percent of deposits, and Citizens in second place with 20.2 percent.
The arrival of Bank of America, which will be converting Fleet’s branches next month, has already heated up the competition across the Rhode Island market, with all the major players vying for customers with cut-rate prices and up to $100 in cash incentives for opening new checking accounts.
In a recent interview, Anne Finucane, Bank of America’s Northeast market president, said the bank’s immediate priority isn’t so much to gain customers, but to form “deeper relationships” with its existing clientele. Despite all its competitors’ efforts to steal Fleet customers away, however, the bank says it has held on to most.
At Citizens, meanwhile, the Rhode Island figures were embraced as proof that the bank’s effort to be a friendly hometown bank with big-bank resources is a success.
“The Rhode Island situation for us is fascinating, because we have such an incredible market share,” said Robert M. Mahoney, vice chairman for New England banking at Citizens Financial Group, in an interview. “I mean, 43, 44 percent market share is unbelievable. And to grow market share when you’re at that level is pretty difficult. But fundamentally, I think our people are delivering a great product, and most importantly, it’s about service. Our service scores in Rhode Island are the highest scores we have anywhere in the country.”
Citizens surveys 50 customers per branch per month, Mahoney said, and asks how satisfied they are with the bank. Last month, he said, 91 percent replied they were either “totally” or “very” satisfied; the average this year has been 90 percent.
“Next year we’re putting another $1.5 million into incentive plans just to incent better service,” he said. “I believe in Rhode Island we can get to 95 percent totally and very satisfied. It’s that simple: We knock ourselves out to deliver high-quality service.”
Citizens even has an edge on small- and mid-sized banks, Mahoney said, because although they can more easily have the friendly tellers who greet customers by name, many people care less about that than about other conveniences Citizens can offer.
“For some people, extraordinary service means Sunday banking,” he said – something only Citizens provides in Rhode Island. “For a lot of people, particularly busy people, you’ve got to be ready when they want to do banking.”
Both Washington Trust and BankRI seem to be aware of that. Washington Trust this year added ATMs at dozens of Brooks Pharmacy stores. BankRI has invested in an improved Web site. And both are expanding geographically – still not close to Citizens’ coverage of Rhode Island, but starting to make themselves viable options for customers outside their core markets.
Elizabeth B. Eckel, Washington Trust’s senior vice president for marketing, said until the bank acquired First Bank in 2002, it had been happy to dominate South County, and hadn’t even advertised statewide.
“We know our future growth lies in other parts of Rhode Island, particularly in Kent and Providence counties,” she said. Opening a Warwick branch last year, for example, turned out to be “a terrific strategic move,” she said, with the costs already covered and more than $50 million in new deposits based there.
Rhode Islanders also like homegrown banks, Eckel said, and with Fleet in a North Carolina bank’s hands, and Citizens now effectively based in Boston, and owned by a Scottish bank, Washington Trust is the state’s biggest homegrown institution.
“There are opportunities for the smaller institutions to gain market share
from the B of As and the Citizens,” she said. “Every little piece of market
share we gain helps our bottom line. (And) once they’ve lost that business,
it’s hard to get it back.”
