The Opportunity


The real opportunity for FAMILY FINANCIAL CENTERS resides in the fact that, despite consumer demand, the alternative financial services industry continues to be a fragmented and, for the most part, unsophisticated industry with no dominant players. In fact, if you took all of the national and regional chains and combined them, they would still comprise only 15-20% of the market. In other words, the field is predominantly made up of small independent operators who have little knowledge or interest in the fundamentals of branding, marketing, technology and customer service. An analogous situation is the hardware store industry. The days of the neighborhood Mom and Pop hardware stores are gone. The have been replaced by professionally branded players like Home Depot and Lowe’s who have the systems and tools to operate on a completely different level. They offered their customers choices made possible by organization and systems, as well as ambience, convenience and service unlike anything they’d seen before. The customers voted with their feet, and the market of the branded players grew accordingly. A similar opportunity now exists in the alternative financial services industry for a professional branded player who can bring the same kind of sophistication and execution in all aspects of the business. For FAMILY FINANCIAL CENTERS, this means looking and acting like the neighborhood bank of old, while employing the technology and systems of today to meet the modern customer’s needs. Branding, technology, convenience, and good old-fashioned customer service and relationship building in the community will create the grassroots loyalty and word of mouth advertising that will establish the FFC brand in a market eager for something better.

Another important factor that bodes favorably for the professional branded player is the move by the industry as a whole to a more mature and more sophisticated approach to the business. This trend is being driven by a number of forces. The first is the increasing regulation of both the check cashing and payday loan industries by the state banking authorities. This has been the case for some time in the check cashing industry, which for the most part, is a stable and regulated industry. Many of the states currently have mandated maximums on fees, and this forces all providers to compete at the same or similar price levels. This, by definition, helps the superior player who is offering more value for the same price. The states also have specific licensing requirements and periodic audits. With the advent of the Patriot Act, all financial institutions are under more intense scrutiny and the reporting and record-keeping requirements have increased. This is good news for the professional provider because his technology and operating systems will allow him to comfortably remain in compliance, while the poorer operators struggle to meet or keep up with escalating standards. Some of these smaller providers have already decided that this is not the game they want to be in and are selling their centers and getting out. This, in turn, provides additional acquisition and growth opportunities. Another trend that is helping to drive the full-service branded player to the forefront is the closing of the gap between the traditional check cashing customer and the payday loan customer. There is a demographic shift taking place in which more and more of the middle income market is using alternative financial service centers, particularly check cashers, and as this demographic skews higher and higher, the gap between this customer and the payday loan customer, who normally has a banking relationship, is closing. The modern Home Depot of financial service centers will be able to meet the needs of both market segments and also offer an array of other complimentary financial products and services, thereby becoming a one-stop financial center for the middle-market consumer.