Randolph Bancorp in Stoughton, Mass., is undergoing a historic transformation.

Earlier this summer, the parent of Randolph Savings Bank — one of New England's oldest thrifts — raised $57 million in an initial public offering and closed on its first bank acquisition in its history.

Flush with cash from that IPO, the $456 million-asset thrift has also begun investing heavily in new technologies that Chief Executive Jim McDonough said will help it better compete for retail and small-business customers. It recently began offering person-to-person payments and will soon roll out new and improved online banking and electronic payment services for its small-business customers, as well as other new digital services.

"We are committed to investing in the services and distribution channels that today's customers are demanding to make their financial lives easier," said Jim McDonough, who took over as CEO in 2013. "If community banks wants to compete today they have to be committed to being quick adopters of technology."

The 165-year-old Randolph completed its conversion from a mutual thrift to a stock-owned company on July 1, and it used a chunk of the proceeds from the stock sale to acquire the $73 million-asset First Eastern Bancshares in Andover, Mass. In that deal, which also closed July 1, Randolph inherited a seventh branch –its first in downtown Boston — as well as seven mortgage loan offices in Massachusetts and New Hampshire.

"A key component of our growth strategy has been investment in our residential lending business," McDonough said when the deal was announced last year.

But investment in digital has also been one of McDonough's top priorities. These investments include both upgrading existing technology as well as adding new digital services it previously didn't offer. An example of the former includes its adoption of the Fiserv Mobiliti mobile banking platform, which allowed the bank to offer new features such as mobile P-to-P payments and a "quick balance" function that enables customers to see an account balance without logging in.

It is also investing in a multichannel digital marketing solution, e-statements for business customers, and a service called Card Valet, which allows customers to manage their debit and credit cards — such as setting spending limits — from their mobile device.
Christine Barry, a senior analyst with Aite Group, said small banks, despite their limited budgets, can't afford to skimp on technology.

"Customers care about the sophistication of a bank's online or mobile capabilities," she said. "And even if a customer doesn't use mobile banking, they expect their bank to offer it."

While many community banks have been content to offer technology that is just "good enough," Barry said "there's a growing minority of community banks" — like Randolph — "that are looking to provide the best digital services.

Small-business banking should be a particular area of focus as competition from online lenders intensifies.

"Especially for community banks, it's important to focus on small-business customers," she said. Community banks "tend to know these customers better and have relationships with them, so if they can offer the digital services small businesses want, they can really deepen that relationship. And when you consider all the fee-based revenue banks have lost on the consumer side, it makes sense for banks to focus on serving these customers."

McDonough said as Randolph looks to grow, it will seek to strike a balance between providing cutting-edge digital services and maintaining the "human touch" that is a community bank's strength.

"The personal touch comes in initially with the delivery of the services," he said." A customer doesn't have to fend for themselves as they learn a new technology, how to use it, and how to protect their privacy, because this is part of our conversations as customers try services for the first time. Then the next key is to ensure each customer can have an end-to-end experience, whether they use their phone, PC, or come into a branch. With an integrated experience … we are able to see a customer's full relationship across multiple platforms."

McDonough added that the bank "still has more work to do on bringing other facets of the changing definition of community into our products and services," such as finding better ways to integrate social media into its financial tools.

"While we actively participate in multiple social communities with our customers we don't yet have a seamless way to bring that experience into our digital services," he said.

Teri Carstensen, the president of bank solutions for Fiserv, said that the expectation now among consumers is that banks, no matter their size, will offer robust digital services. She cited a consumer survey conducted earlier this year by Fiserv in which 36% of respondents said they are using online banking more than they did a year ago, and 51% said they are using mobile banking more than they did a year ago.

"This is the way people live today, and it's important for financial institutions to stay in step, especially as more providers enter the financial services landscape and competition grows," she said.