MADISON, Wis. -- America's small-town banks didn't worry in the past about competition. After all, they were the only game in town.
Now big city banks, mutual fund companies and Internet financial services are all vying for their customers, and community banks have had to fight back by working harder.
That's good news for consumers.
Community banks -- long known for their "Howdy folks!" hands-on personal service -- have begun offering a broader variety of accounts and services that provide good value to small savers.
"Because of cable TV and other media, the amount of information about financial services has exploded and the expectations of consumers are higher," said Phillip D. White, who heads a financial consulting firm in Boulder, Colo. "When community banks do innovative things, it's positive for the consumer and shows the banks intend to hold on to them."
Bank executives attending the Graduate School of Banking at the University of Wisconsin-Madison this month said "one-size-fits-all" accounts no longer work, even at small-town banks.
At MidAmerica National Bank in Canton, Ill., for example, customers can select from a variety of checking accounts "depending on where they are in life," said Kathy Burton, who is an auditor at the bank.
To get young customers, MidAmerica offers free checking for high school students, she said. Regular checking accounts carry a low fee of $6 a month. Savers, meanwhile, can earn 2.5 percent interest a month on their checking accounts if they maintain balances of $2,500 or more.
Hyde Park Bank in Chicago wanted to offer savers an alternative to high-yielding mutual funds available at brokerage houses. Its answer was a "premium money market account" that pays a market return on a minimum $10,000 deposit.
The account, currently paying 5.87 percent interest, is federally insured and can be cashed in at any time.
In Martins Ferry, Ohio, Citizens Bank is going online next month, said senior vice president Scott Everson.
"We needed something for that younger generation that doesn't want to come into the bank," Everson said. "They grew up with Nintendo, and the computer is the way they like to do things."
Computer-literate customers will be able to check their balances, move funds among accounts and apply for loans via the Internet, he said. They'll get free online bill-paying services for six months, then pay $4.95 a month after that.
Many of the small-town banks also are offering services that big-city banks wouldn't even consider because they'd be too difficult -- or costly -- to run.
Some provide what they call "courier service," which involves sending a bank van out to the offices of small businesses to pick up their deposits or drop off cash. Others let some customers -- especially small businessmen and seniors -- use their copy machines for free. And often there's free coffee in the lobby.
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