Straight Talk about Technology

By Swann, Nicole Leigh | Independent Banker, November 2006 | Go to article overview

Straight Talk about Technology


Swann, Nicole Leigh, Independent Banker


Community bankers Bruce Miller and Gary Kern sound off on technology obstacles and opportunities

Community bankers make reputations on personalized service, but those interactions are increasingly influenced by technological innovations running on the backend: From analyzing customers' banking relationships to quantifying their profitability to safeguarding customers' interests.

Independent Banker interviewed community bankers Gary Kern, chief information officer at $970 million-asset Mutual Federal Savings Bank in Muncie, Ind., and Bruce Miller, chief information officer at $750 million-asset Bank of American Fork, Utah, to get their impressions on the hot trends, hot-button issues and sitting in the hot seat when a technology doesn't deliver on its promise.

Independent Banker: Describe your top technology initiative and how it fits into the bank's long-term strategic plan.

Gary Kern: We are getting ready to kick off a long awaited major overhaul to our data network with the inclusion of a Voice over Internet Protocol (VoIP) network. We actually received board approval for it just this past month.

Bruce Miller: We're building a redundant data network for disaster recovery purposes, and part of that plan is to upgrade our telephone system to VoIP as well. One of the things that we learned, I guess you could say vicariously, through Katrina and Sept. 11, is that it's really critical that our customers have connectivity to our branch operations. Our phone system is a critical link in managing the public's expectations about how the Bank of American Fork is doing in the face of a disaster.

Kern: We also really feel like we need to get more out of what we already have. We tend to get products that fit a niche need and the capabilities may be much broader than that, and we don't really leverage them as we could because we're onto the next thing and we don't have the luxury of having people dedicated to extracting the [total] value. We already have [data warehousing and imaging] on site, but we don't really feel like we're taking advantage of all the benefits that they offer; so that will continue to be a major focus area for us for the next couple of years as we struggle with decreasing margins and improving our efficiency ratios.

IB: The Internet has opened up a host of selfservice options from bill payment/presentment to online loan applications. How are you leveraging this delivery channel?

Miller: We have about 10 percent of our households using bill pay. While bill pay is an important ingredient to online banking, I think you're going to see lending evolve more through the online banking channel, as well as targeted marketing and online account opening. But that's all got to be handled very carefully, and there are hurdles still in the way to getting that done right.

Kern: We have about 10 percent of our customers using bill pay as well. Many of our existing customers are older customers, and they're not clamoring to use new technology. But when we sign up college students, the first thing they ask is, "What's your online access? I don't want to have to go to a branch."

IB:What have been the biggest challenges to meeting the multi-factor authentication requirements mandated by the Federal Financial Institutions Examination Council? How are you working through them?

Kern: To some degree, we're relying on our vendors. Probably the part that concerns me the most is the risk assessment component. We will need to be able to show that we went through due diligence or an assessment process and determined that what the vendor is doing will be the correct thing for us.

IB: There seems to be some debate on the best approach. Are you comfortable that the solutions on the forefront adequately address the issue?

Kern: There's still going to be ways to get around it so it still is going to come down to customer education. I mean, if you put in a site key and somebody gives up that information or in some way passes on the key components of that, they're still at risk. …

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