IBC Bank spoke with PYMNTS.com about choosing to eliminate 55 branches, in lieu of taking away free customer products, due to recent banking regulations.
PYMNTS.com: Our readers would love to hear a little bit about the history of International Bancshares Corporation (IBC), the communities it currently serves and what makes IBC unique from other FIs?
IBC Bank: IBC Bank was founded in 1966 to meet the needs of small businesses in Laredo, Texas. Today, it serves as the flagship bank of International Bancshares Corporation. Even after the branch closures, IBC will continue to operate 219 locations and more than 375 ATMs in 89 communities throughout Texas and Oklahoma.
PYMNTS: How did IBC arrive at the decision to close 55 of its smaller store branches? How did the company go about selecting which branches to close?
IBC: The closings are an unfortunate result of recently passed banking regulations that limit how much banks can charge stores for debit card transactions (interchange). Government many times passes regulations that end up hurting the very people they were intended to help. This appears to be one of those cases. The recently passed banking regulations have resulted in numerous changes in the financial industry from the elimination of rewards programs to the elimination of free checking. Our customers have always made it clear to us that free products and services are extremely important to them. To keep those free offerings in place, we had to reduce expenses. This means we will close 55 of our smaller in-store branches located in grocery stores.
There were many variables that were taken into consideration in reaching this decision. Many of those considerations involve business practices that are proprietary and private.
PYMNTS: IBC recently took action to preserve the company’s free products program. Please give us an overview of this program, and why IBC did place focus on maintaining it?
IBC: With a IBC free checking account, customers receive access to a debit card, online banking, online bill pay, IBC Voice phone banking, IBC ATMs, IBC mobile and e-statements all free of charge.
The recently passed banking regulations have resulted in numerous changes in the financial industry from the elimination of rewards programs to the elimination of free checking. Our customers have always made it clear to us that free products and services are extremely important to them. We made our decision to preserve at this time, our free products and services considering customer feedback and research. Current research indicates that customers don’t want to pay bank fees. A survey from SWACHA indicates that 62 percent of debit cards users would cancel their services as a result of a $5 monthly fee. This is in line with our customer feedback.
PYMNTS: How will IBC continue to support customers in communities where branches have been closed?
We want our customers to remain with us and hope they will continue to do business with us at other branches. IBC customers can also access their accounts a myriad of ways including: IBC debit card, IBC Voice, IBC Bank Online, IBC bill pay, IBC Mobile Banking, direct deposit services, and our network of over 375 IBC ATMS’s.
IBC: To ensure that we continue to deliver the best possible service to our customers, once these in-store branches close, we will also be extending our hours and days of operations at some of our remaining traditional branch locations. This will vary by location and will be conveyed via http://www.ibc.com and most consumer touch points.
PYMNTS: Do you feel the new government financial regulations, particularly those impacting debit cards, in the end will slow or spur innovation in payments?
IBC: Most banks are facing interchange revenue loss and will have to make tough decisions regarding innovation. Our commitment to our customers is to continue to enhance all of the ways they access their IBC account: IBC debit card, IBC Voice, IBC Bank Online, IBC Online Bill Pay, IBC Mobile Banking, direct deposit services, and our network of over 375 IBC ATMs. We have many exciting initiatives in the works, but as always, we must align our expenses with revenues.
PYMNTS: What’s next for IBC? What exciting initiatives and innovations are in the works for customers?
IBC: We have plans to provide SMS/text capabilities and alerts to our Mobile Banking platform, as well as Online Account Opening via our website. We will continue to focus on the online/remote channel for added customer convenience. We will continue to solicit customer feedback in order to provide the products and services our customers most desire.