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Community banks use technology to hang with national competition

A brochure at Old Line Bank on North Charles Street shows the options for online and mobile banking and bill pay. (Maximilian Franz)

A brochure at Old Line Bank on North Charles Street shows the options for online and mobile banking and bill pay. (Maximilian Franz)

Small and community banks can use technology to their advantage as they compete with each other and larger banks.

Whether it’s training employees, re-imagining branches, keeping an eye out for new products or interacting with customers, technology has changed the way banks operate as businesses.

“It’s about staying relevant,” said Sherri Wilson, senior vice president of technology and support for Hamilton Bank. “It’s about meeting and exceeding customer need.”

The first thing community banks might note is that they are not tech companies. They don’t write computer programs and develop mobile applications.

They’re banks. They lend money and take deposits.

To keep up with some of the bigger banks — that can and do develop their own technology products — community banks have turned to outside vendors. Hamilton Bank uses a variety of resources to keep up with the latest technology and products, and bank employees go to conferences, subscribe to forums and read reports.

Hamilton staffers talk internally in strategic planning sessions about whether specific products are something they need to compete and to differentiate themselves, Wilson said.

(Illustration by The Daily Record / Maximilian Franz)

(Illustration by The Daily Record / Maximilian Franz)

Some of Maryland’s small banks say this outsourcing can be an asset as they compete with larger banks. It offers Old Line Bank the opportunity to be more flexible and try to get products to customers faster, said David Seyler, a senior vice president at the bank.

“We oftentimes can bring it to market a little bit quicker,” he said. “I can look at it, sit down with my customer, say explain it to me and go back and explain it to my technology partner.”

But at the same time, Wilson believes bigger banks could have some advantages because they can begin developing products on their own rather than waiting on outside providers to have the product.

Still, Hamilton has been able to keep abreast of new products, like the popular person-to-person money transfer product Zelle, and stay competitive with all of their competition, large or small.

“On our end, the tech helps us to be more efficient. From a customer’s perspective, it allows them to connect with us when they want and how they want,” Wilson said. “I don’t think we could compete without it.”

Competing with bigger banks

Traditionally, larger banks, such as Bank of America, M&T Bank and PNC Bank, can take advantage of hundreds of offices (and their ability to pay employees to staff those branches) to offer customers a level of convenience. Those three banks are the state’s largest by deposit size and had 154, 176 and 203 branches in Maryland according to 2017 federal data.

By comparison, community banks have relatively fewer branches and traditionally serve a more condensed area. After a merger with Bay Bank, Old Line Bank has 43 branches. Hamilton Bank had seven in last year’s federal data.

“It’s an exciting time right now to be in the financial services industry because technology allows you to be in a space where maybe we couldn’t have competed before,” Seyler said. “We don’t necessarily need to have a branch on every corner, because a lot of times those customers don’t come into the branch very often.”

Personal touch

Technology allows the smaller banks to keep up with some of the perks the national banks offer while also being able to offer a personal touch, they say.

Both Seyler and Wilson mentioned that unlike larger banks that mostly interact with customers through call centers, managers at Old Line and Hamilton can meet business clients where they are and explain how their technology products work.

“The other thing that really works in a community bank’s favor, is that I will, as the director of cash management, go out to a commercial customer and really show them how to use online banking,” Seyler said. “That’s where we really separate ourselves. I want our customers to fully utilize the product that they have signed up for.”

At the end of the day, that’s the function of the community bank and why the bank’s customers have chosen to bank with them.

“We try to stay in touch. Our relationships with our customers are very important,” Wilson said. “That’s part of our mission is to be a partner in helping our customers to have a better financial future.”

Training employees

The easy assumption to make is that a turn to tech means a bank needs fewer employees.

If fewer people visit a bank branch, why does a bank need to employ as many tellers or other branch jobs?

To an extent, the answer to that question is that a branch does not need as many tellers. But that does not mean the bank workforce has shrunk. Instead, more jobs have been shifted to technology and customer-support jobs, Hamilton’s Wilson said.

Keeping employees trained on the most recent technologies is also key.

“You start with the product, and you have to train your employees to be there,” she said.

To remain competitive the banks need to have the most up-to-date technology possible. But if an employee cannot help clients manage the new products, a community bank loses some of its edge.


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