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Community banks are the lifeblood of their communities

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There has been much discussion and debate recently about the role of community banking in America.  In fact, I read with interest a recent article in the Wall Street Journal, “Tally of U.S. Banks Sinks to Record Low,” which compelled me to write this blog post reaffirming our support of these banks.

The article points out that the number of banks has dramatically decreased to 6,891 as of September 30, 2013. The reasons for this decline are varied.

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On one side there are changing demographics, and the challenges smaller, more rural communities face while simultaneously trying to prosper. Not to mention the impact of rapidly changing technology and accelerating costs.

On the other side, persistently low interest rates and a difficult regulatory environment have made the business of banking more challenging. Clearly interest rates will return to a more “normal” level at some point, and our hope is that regulators find proper balance as we move forward.

So, you may be wondering, what does this all mean for the banking industry? Opinions have varied greatly as to whether a reduction in the number of banks is a positive or negative trend. There also have been various viewpoints on the impact it could have for community banks, given the large number represented in the decline. This in particular is the point I would like to address.

UMB has been offering Correspondent Banking services since 1928, and we currently work with more than 1,000 community banks. Because of our relationships and experience in this area, we know firsthand the value they provide and the part they play in not only our industry, but in their communities as well.

We understand the critical banking and financial needs community banks address within their communities, and we are firm in our convictions that the community banking model works. Our company has always been an advocate for community banks that serve their local communities, businesses and citizens, often providing services larger banks are frequently unwilling to extend.

We know that banks are the lifeblood of their communities. As such, having community banks solidly positioned with the services required to fulfill their mission of growing and supporting their communities is crucial to the long-term economic health and vitality of their communities. It is also essential for the future of banking—and we will continue to be here to support community banks in their endeavors.


Mr. deSilva is president and chief operating officer of UMB Financial Corporation. He is also vice chairman of UMB Bank, n.a. Mr. deSilva joined UMB in January 2004. He is primarily responsible for UMB's fee-producing business units and product lines, including Scout Investments; UMB Fund Services, UMB Healthcare Services Payment Solutions, Prairie Capital Management. Additionally, he is responsible for all corporate operations, technology, properties, security and marketing.



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Balancing Act: The changing landscape of commercial banking

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Technology has changed the way people do business. It’s also changed the way they do business banking. You can transfer money between two business accounts in minutes with online banking or complete and submit your entire expense report on the computer. Technology gives you the convenience of having greater control over your company’s finances. But that shouldn’t change the business partnership you have with your company’s bank.

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Like any relationship, creating and maintaining an effective partnership requires regular communication between you and your bank partner.  A strong relationship with your company’s financial institution not only enhances your customer experience, but also helps the bank balance quality service with a high level of information security.

Customer Experience

Your banker should know your company beyond what can be learned from a monthly commercial credit card statement. Your bank should act as an extension of your business and not just a place for you to keep your corporate accounts. Understanding the business cycles and unique financial needs of your engineering firm or your agriculture business gives your bank the insight to be a partner working with you on developing ideas to help your business succeed. This experience begins with a simple but powerful idea: know your customer.

For example, a bank that uses “know your customer” requirements for you to access your account can take this information and use it as a chance to get to know you and your employees better. At UMB, we require you to provide information that will uniquely identify you as the customer you say you are when you call us. These precautions are also good security measures to reduce potential fraud on your accounts.

Information Security

Having a strong relationship with your bank is important to your information security. Most banks will monitor spending habits to check for fraudulent activity on your commercial cards. For example, if a commercial card for a construction company starts posting a series of expensive charges at a department store within several hours, UMB might flag that account for suspicious activity or even put a hold on the card to stop any further transactions. Some might see this as too constrictive and even intrusive, but if you have a good working relationship with your financial institution you’re more likely to view this type of monitoring as a partner looking out for your company’s financial well-being.

So what can you do as a customer to keep the two-way communication open? Keeping your profile with your bank up-to-date makes it easier to verify who you are when you need to contact them. This also helps your bank ensure an accurate and safe customer experience.

Balancing self-service, customer service and information security is a challenge. A good bank should maintain the fine line between giving you the freedom to run your business and manage your finances, while remaining a loyal business partner who will always looks out for your best interests and the financial safety of your company.


Mr. Wegner is vice president and commercial card product manager at UMB. In this role, he is responsible for product development and program design for new and existing programs. He joined UMB in 2011. He earned an MBA in Management from Rockhurst University in Kansas City MO. He is a member of the NAPCP Public Sector Advisory Board.



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