ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Friday, January 12, 1996 TAG: 9601120023
SECTION: BUSINESS PAGE: A-7 EDITION: METRO
SOURCE: MAG POFF STAFF WRITER
INDUSTRY CONSOLIDATION may be unstoppable, but it shouldn't be at the expense of the customer, First Union's chairman said in Roanoke.
Having just completed one of the U.S. banking industry's largest mergers, First Union Corp.'s chairman said Thursday his greatest sense of urgency is not acquiring more branches but in creating better delivery channels for the bank's 11 million customers.
Charlotte, N.C.-based First Union this month acquired First Fidelity Bancorp. of Newark, N.J., and Philadelphia for $5.89 billion, creating the sixth largest U.S. banking company.
In remarks prepared for the annual dinner of the Roanoke Regional Chamber of Commerce, Edward E. Crutchfield did not rule out future mergers, however.
"Industry consolidation is an unstoppable economic phenomenon for one reason," Crutchfield said. "If you're going to be in a mature industry or business today, you need to have the scale, the resources, the talent and the name recognition to compete.
"In fact," he added, "I have to say that if a banking company hasn't acquired the scale and resources by now - the party's over."
Crutchfield said the competitive environment is responsible for the recent wave of consolidation in many industries, such as retail, health care, communications, entertainment and banking.
"In short, too many of us are chasing the same customers," Crutchfield said. "The biggest threat isn't coming from the people we've always thought we were competing against. Today, it's coming from high-tech innovators with low-cost structures."
In retailing, he said, the threat is from superstores focused on single lines of goods, warehouse clubs, catalog companies and home shopping TV networks. In communications, cable TV companies are competing with phone companies and providers of on-line services.
"The banking industry's greatest competition today, in fact, is from Wall Street, the brokerage firms, the mutual funds and the credit card companies," Crutchfield said. "We're also feeling the hot breath on our necks from the information technology companies like Microsoft, and even consumer electronics companies with toll-free, customer-assistance phone lines."
He said banks "sat on their hands" for 15 years while mutual funds grew from zero to assets of more than $3 trillion. Today, he said, 13 of the top 50 credit card issuers are institutions other than banks, including three of the top five.
"I'm not saying all small companies are doomed," Crutchfield said. He predicted that there is room for the small community banks or niche banks, but "I don't think there's room for the midsized bank." Community banks, he said, "get the benefits of picking their spots."
Banks such as First Union, he said, have the scale to offer the broad array of products that customers demand. "You can't be all things to all people, but you had better be all the relevant things to most people if you hope to remain in business."
The way to survive, he said, is to offer customers what they want, when and where they want it. "In other words, focus on your customers; listen to your customers.
"I believe you can succeed in this environment if you stay focused on your customers and your core values, and if you embrace change - and do it quickly."
Crutchfield also told chamber members that Roanoke "is vitally important to First Union. As you know, we are proud to be in your area for the long haul." Roanoke is headquarters for the corporation's First Union National Bank of Virginia subsidiary and also houses some systemwide operations.
He also praised the valley for the restoration completed last year of Hotel Roanoke, where the chamber's meeting was held. "I only wish you could export the brand of regional cooperation you have put to work for this area," Crutchfield said.
In other action at the chamber dinner, Salem businessman and philanthropist Cabell Brand received the John W. Hancock Community Service Award for his work in fighting poverty. The annual award, which until this year was unnamed, is given jointly by the chamber and United Way of Roanoke Valley.
Also, Larry Gene Martin was named police officer of the year for rescuing a disabled woman from her burning car Sept. 27.
LENGTH: Medium: 80 lines ILLUSTRATION: PHOTO: (headshot) Crutchfield.by CNB