Big banks have to think small to give best customer service.

SOMETIMES being, big just isn't enough. At least that's the lesson some of the region's largest banks have come to learn as they compete with niche lenders for the attention of L.A. businesses.

National and major regional banks long have argued that they can provide the same high level of customer service, but at a lower cost. Still, small banks persist by going after slivers of the market, as well as clients who demand personal attention.

It's an approach that has been effective and profitable--and continually attracts larger banks' attention.

Even as Southern California's dominant banks have rapidly expanded, many of the institutions have found it necessary to employ--either by imitation or acquisition--the practices of their smaller competitors.

"We adopt practices that work," said Maria Garcia, business development specialist with Washington Mutual Inc. "When Washington Mutual came into California, we bought up numerous banks and kept those practices that worked."

For example, the Seattle-based financial institution has programs that provide professionals--such as doctors and accountants--with lines of credit and discounts. "We can couple that with some of our free products and services, like a free business checking account," she said. "Those are the types of services that differentiate us."

Bank of America Corp. takes a different approach. Each business client has a manager who assembles teams of specialists in fields ranging from non-profit and religious institutions to fast food franchises and sports teams.

"It's sort of a plug-and-play notion," said Rod Banks, head of the business banking division at Bank of America's L.A.-area office. "Whatever your issues may be, a company of our size has someone on staff who can meet those needs."

The larger banks also try to make themselves operate like smaller banks by giving businesses a single contact and by having branches close to commercial centers.

More recently, banks have begun hiring loan officers who reflect a branch's local community. In areas that have a large Latino or Asian population, the banks try to have someone on staff who understands language and customs.

"We want bankers to mirror the clients we're serving," Banks said. "In Los Angeles, we absolutely need bankers who can speak Spanish and who understand with the Latino business community."

Specialization 

Other large banks have specialty divisions, as well. For more than 20 years, Union Bank of California has had niche lending divisions that operate in the entertainment and energy industries.

The divisions have bankers who are trained in the industries they are serving. Those in the entertainment division, for example, follow the changing ways of financing feature films. Their counterparts in the energy division would be familiar with the individual companies in the industry and their changing debt and financial structures.

"A CEO in these industries wants to talk to people who understands his industry and understands the type of products he is going to be interested in," said Robert Dawson, executive vice president of corporate capital markets for Union Bank of California. "For that reason, we have specialists who are familiar with these worlds and know them backwards and forwards."

Dawson, who runs the bank's entertainment group, said bankers also introduce one client to another. "We kind of ingratiate ourselves and add value if we can by introducing companies," he said. "That way we might have a leg up to do their debt financing if they do merge."

Union Bank's entertainment practice has some new competition. Two new L.A. County banks, Private Bank of California and 1st Century Bank, were founded in the last year to mainly focus on Hollywood.

Dawson said that in the banking world, successful ideas are copied quickly. "It's hard to be innovative and stay out there by yourself," he said. "If you find a way to do something that's profitable and is a good margin business, you're going to have imitators out there pretty quickly."

For all the efforts by the majors, smaller banks often still boast more personalized customer service, quicker turnaround times on loans, and a better understanding of the business they deal with.

Farhad Ghassemieh, chief executive of West Hollywood-based First Credit Bank, compared the difference in style to buying clothes off the rack as opposed to having them custom made. "If what you need can be found anywhere, you'll go with a one-size-fits-all bank," he said. "At a custom tailor, you may pay a premium, but you'll get something that fits you perfectly."

Eventually, though, many clients of smaller banks move onto bigger institutions, which can offer larger loans and more services.

"If a business is going with a smaller niche bank, they go there first because the bank had an understanding that no one else had," Banks said. "As that client grows they'll outgrow that niche bank after time and look for a larger provider."