A lockbox is one of those cash management services that community banks are asked for from time to time, and it is a service community banks need to have in order to compete with the larger banks.

We find that often a community bank will be faced with a situation in which a commercial customer will want to do business with them, but one of the things that they will ask for is a lockbox service – and if the bank doesn’t have it, they are probably going to have to say no to the customer and the deposits they will bring.

Lighthouse Payment Services did a study in 2005 where a community bank had seven lockbox customers, each generating over $500,000 in deposits for the bank. The average bill for the lockbox service to the customer was only $175 per month! These seven customers would not have been customers of that particular bank if that bank did not have a lockbox service – so you can see the potential here.

Lockboxes also help with customer retention, because when a customer sets up a lockbox service, it can be difficult to move that service. Once the customer has told all of their customers to mail payments to a specific location, they are really reluctant to change that location. It’s one of the services that, once you sell it, you are going to keep that customer for a long time.

Community banks are constantly challenged by today’s regulatory environment, but they are also challenged by all of their competition. Lockboxes can help position them a little better to compete with the larger banks, who often offer the service. Any community bank can get a lockbox service, and they don’t have to pay a thing for it, until they actually have a customer using the service. It’s one of the best services a bank can offer, because it can be positioned and put in place, and when you have a customer that comes looking, you’re ready with a solution.

IIf you’d like to learn more, reach out to us and we’d be happy to show how easy it is to introduce a lockbox service to your cash management program.