Technology

“We can develop technology for our markets,” Pierce commented, “but can we leverage that advantage?”

Mike Maddox of INTRUST believes that $1-$10 billion banks have an advantage to customize technology to their operations. Paul Thompson and Tom Blackburn observe with interest.

“We’re really working hard to get up to speed in treasury management,” said Cal Glasco of the Great Southern Bank, many of whose clients are in commercial real estate. “That’s who are our clients are.” Great Southern is concentrating much of its technology effort in the investment arena. “It is very hard to bite the bullet,” said Glasco in reference to the cost of new technology, “but if you don’t someone else will.”

“You are going to have to embrace technology,” said John Hense. “Twenty years from now you will be dealing with wealth that only knows techn-ology.” He believes that those institutions that remain at the forefront of technological change will win over the new generation of consumers.

“It’s instructive when I look at my three kids,” said Bob Regnier. “They don’t write checks.” Given the Internet savvy of the up-and-coming generations, the Bank of Blue Valley recently invested half a million dollars in a loan-operating system for its Internet mortgage operation. “We could not afford to make that investment, or not make it,” said Regnier.

Mike Maddox argued that one advantage that banks in the $1-10 billion range have is the ability to invest in and customize their technology.

As Linda Hanson observed, her institution’s in-house staff, like most of the others, was constantly researching and developing customized solutions. Enterprise Bank & Trust is competing against big banks, especially in commercial lending, said Hanson, which is one reason she and her colleagues remain committed to innovation.

“We need discipline to invest in things that will have return,” cautioned Jim Sangster. All departments in a given institution have a wish list, he observed. The “real challenge” is to prioritize those needs to get an adequate return.

Linda Hanson of reports that Enterprise Bank & Trust is able to compete with big banks by developing customized technology solutions.

“Everything we do internally has a technology component to it,” agreed Dennis Pierce. He too argued for the discipline to allocate and prioritize. A half-million dollar invest-ment, affirmed Roger Arwood, may be obsolete when ready.

John Hense spoke of the “fine line between investment in bricks and mortar and investment in technology.” Historically, institutions have put banks in a given community to gain visibility and to attract deposits. About 10 years ago, the talk began of a “handoff to virtual,” but, as Hense observed, that still hasn’t occurred. Speaking of brick and mortar investment, he wondered out loud, “In what generation does that go away?”

Hense made the interesting point that customer service will be defined differently in the future. Specifically, clients will judge the institution by the privacy, accuracy and safety of the technology it employs. Institutional credibility depends on the safety and security of a client’s transaction.

Bob Litan added the unnerving concept that security breaches can occur that are beyond the control of even the most conscientious of institutions.

In the brokerage business too, Jack Dillingham argued for the value of physical visibility. “We want them to come in and see us,” said Dillingham. Tom Blackburn was of the opinion that the continued value of face-to-face contact presented an opportunity for community banks, especially since so many would-be customers feel “alienated by large institutions.”

Some institutions use technology, especially new technologies, as a marketing wedge. Dave Anderson talked about how some institutions used to give computers and systems to corporate treasurers to bond them to the institution in question. Mark Jorgensen’s US Bank was the first in the market with the on-site deposit system, and he used that as a marketing wedge.

The problem, as Dennis Pierce commented, is that the life cycle of a new product is very short. Tech-nology is easy to duplicate. The first implementers of a new product may have no more than a six-month advantage over the competition.

Still, there was general agreement that technology was not a substitute for the development of relationships. “You have to have that relationship,” said Jorgensen, speaking for himself and his colleagues. “That’s why we are all in the business, because we enjoy that.”