When Van Dukeman (’80 alumnus), President and CEO, First Busey Corporation, Urbana, graduated from the University of Illinois, there were about 15,000 banks operating in the United States, with roughly one half that amount today. Dukeman was a guest speaker in October, addressing MBA and MSF students in professor Emeritus Morgan Lynge’s finance class, and said that he is happy to take on any competition – from behemoth to smaller banks.
Given the steady stream of consolidation over the past 10 years, Dukeman said the banking industry today boils down to pricing power versus customer knowledge, and both large and community banks have found their own niche.
“They have each found a way to compete in the marketplace, albeit differently,” said Dukeman. “The large banks have significant pricing power, the ability to increase efficiency, keep costs lower, and can offer more competitive pricing.”
In contrast, smaller banks focus on an area that the behemoths are not good at, namely, customer knowledge.
“The small banks are able to recognize regional customers’ needs at a granular level, and act quickly to tailor solutions for them,” he added. “While large banks are more centrally-driven with a homogenized cookie cutter approach, the small banks offer a decentralized power, so people have the authority to make direct decisions for customers.”
Based on his 25+ years experience in the industry and his share of mergers and acquisitions, including the recent merger of First Busey Corp. and Main Street Trust, Inc., Dukeman said that even with its behemoth tendencies, banking is still very relationship-driven.
“Mergers and acquisitions are often more about the relationships and social issues than the financial impact,” he said. “It is still in many ways a cottage industry.”
What keeps Dukeman up at night concerning his merger is the melding of the two bank cultures.
“In the past 60 days we’ve made some great progress here and have had less “we” and “them” discussions,” he said. “It’s only when you’re finally only using “us” that it’s truly complete. In addition, the upcoming merger of our two Illinois banks and the corresponding computer conversion is a huge undertaking. We want this process to be as seamless as possible for our customers.”
An industry trend that Dukeman expects is more banking competition, whether that bank is a behemoth or a regional bank with services offered in Wal-Mart stores.
“I look at it with a Darwinian approach,” he said. “Bring on the competition, and may the strong survive! Whenever you have great competition, you have excellence in terms of serving customers and business operating more efficiently.”
“I’m confident our newly merged bank will hold its own,” he added. “Banking is about convenience and piece-of-mind to the customer. We cover this market very well and have been around for nearly 140 years.”
Van Dukeman began his career in commercial banking in Texas, later returning to Illinois to work for Busey Bank. He then became the President and CEO (and part owner) of Main Street Trust, Inc. in Champaign. In July the bank holding companies First Busey Corp. and Main Street Trust, Inc. merged, with plans to merge their subsidiary banks this fall under the name of Busey Bank. The merged holding company has total assets of $4.2 billion and the new Busey Bank will be one of the 100 largest banks in the U.S.
First Busey Corp. has a commercial banking business in Illinois, Indiana, and Florida and is also active in the wealth management business.
He holds the designation of Chartered Financial Analyst and has taught in the CFA Review program at the University of Illinois. He has also been a member of the Dean’s Business Council of the College of Business.