Who says you can't teach an old bank new tricks?
Boston-based Eastern Bank is a 200-year-old mutual thrift "probably not the type of bank you'd associate with innovation," its chairman and chief executive, Richard E. Holbrook, admits.
Over the past 10 months, however, $8.8 billion-asset Eastern has moved closer to the cutting edge than Holbrook, or anyone else familiar with the company, probably ever expected.
In April, Eastern announced a strategic partnership with a group of entrepreneurs who had previously run PerkStreet Financial, a defunct Boston company that offered online checking accounts and a high-reward debit card.
The group formed the core of Eastern Labs, a technology unit Holbrook is counting on to "build cool stuff, buy cool stuff and change our culture."
Speaking in early February at the American Bankers Association's national conference for community bankers in Boca Raton, Fla., Holbrook said Eastern expects to invest about $4 million a year on the initiative. With less than a year of operating experience, Holbrook said it's too early to say whether Eastern Labs will live up to expectations. One thing he is certain about, though, is that the effort was necessary.
"I was worried that maybe [banks'] monopolies on the payment system and lending were being taken away from us," he said. "It was time to take some bold steps."
A central component of Eastern Labs' work will be finding ways to use technology to capitalize on the massive amount of customer data Eastern collects. Eastern executed a test run in October when Eastern Labs designed a loan offer it targeted at several hundred small businesses selected because they had a deposit relationship with Eastern but had never borrowed from the bank. The pitch resulted in 50 new loans, according to Holbrook.