Innovation in the Bank: Community Bank Leaders Weigh in on How They Handle Technological Changes and IT Strategic Planning While Keeping Focused on Customer Needs

By Sparks, Evan | ABA Banking Journal, November-December 2016 | Go to article overview

Innovation in the Bank: Community Bank Leaders Weigh in on How They Handle Technological Changes and IT Strategic Planning While Keeping Focused on Customer Needs


Sparks, Evan, ABA Banking Journal


Ask community bankers about their single biggest technological challenge, and the answer is the same: the pace of change. But the technological change isn't the only limiting factor. Even bankers most optimistic and excited about new technologies can find it difficult to implement new offerings. "By the time that you start seeing it, working it, training it and implementing it, something else is coming at you," says Guillermo Diaz-Rousselot, president and CEO of Continental National Bank in Miami.

There's also distinction between what George Hermann calls "offensive" and "defensive" technologies--those you implement to grow and those you implement just to keep up. If your bank doesn't adopt the technology, says Hermann, president and CEO at Windsor Federal in Windsor, Conn., the customer "is going to go down the street to somebody else, and now you lose them completely."

For community bankers, the need to keep up technologically is existential--as Deborah Cole of Nashville's Citizens Savings Bank and Trust puts it, if they can't keep pace, "I think very quickly customers would look at a community bank and say, 'You can't take care of my needs.' I've got to keep up in order to keep our customer base."

Winning investments

If you ask a younger, tech-savvy bank customer today about their favorite bank innovation, they'll likely tell you it's the ability to cash a check using their phones. Bankers agree and are working on new additions to mobile app performance for retail customers. At Windsor Federal, customers can turn a debit card on and off via the app and offer "fast balance" access without logging in. "That has been a big hit," Hermann says. The use of biometrics to bypass password requirements, such as Apple's Touch ID technology, continues to percolate through community banks, remarks Trey Maust, who co-heads Lewis and Clark Bank in Oregon City, Ore.

"For business customers, remote deposit capture is increasingly a necessity," says Sue Brignac, the chairman, president and CEO of Washington State Bank in Washington, La. "I have a lot of commercial customers that were brought over by two merchant vendors, and remote deposit capture has really, really aided those commercial customers."

Not all tech investments are winners, of course. Some of that effect is due to the nature of technology, which can rapidly become obsolete. "How much money was put into image ATMs?" Hermann asks. "You can do that on the phone now, so what do you need an image ATM for?"

Another visual technology--interactive teller machines, or ITMs--has bankers very excited about extending the reach of their offices. At FirstCapital Bank of Texas, the until-recently booming oil market in Midland, Texas, led to massive competition for local talent, with oil firms able to offer much higher salaries for those who traditionally would have been attracted to bank teller jobs. "The year before we implemented ITMs, we had 100 percent turnover of our tellers in Midland," says bank president Jay Isaacs. But the video-based technology allowed the bank to offer extended service at branches but operate them with more readily available staff in Lubbock.

"We now operate from 6:00 a.m. to midnight, seven days a week," he explains. "That's been a huge benefit for our customer base." It's also a big driver of efficiency, as the bank can now operate its seven Midland branches with just 4-5 tellers total, versus 28 before.

Eye on the customer

Maust notes that the most successful innovations have focused first on improving the customer experience but that they have significant secondary benefits in bank efficiencies. (He also uses ITMs to serve a remote, central Oregon location outside of his main market, adding full branch capabilities to what is otherwise a loan office.)

Bankers can find it difficult sometimes to talk about tech with customers, but it's essential to. "When you have the customer expectations of ease of delivery, and yet we have to protect that information, it's a difficult balance," says John Bothof, market president in the Omaha, Neb. …

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