Eastern Bank in Boston is making progress on the 2.0 version of its innovation lab.

The $11 billion-asset mutual shed its original lab last year when it spun off Numerated Growth Technologies, a small-business lending startup for banks. Dan O’Malley, Eastern’s former chief digital officer and leader of the 3-year-old innovation unit, took his team over to Numerated as part of spinoff.

Fast forward 10 months and the new lab is starting to take shape. The mutual, which recently hired a State Street executive as O'Malley's successor, is taking lessons from its past to adjust the strategy for the new Eastern Labs, said Donald Westermann, the bank’s chief information officer.

Instead of focusing intently on one product, as the original team did, Westermann said he hopes the new lab takes a broader approach that sparks creativity across the company. He envisions the new lab helping Eastern become a more technologically savvy institution in a way that boosts the overall fintech ecosystem.

“At the highest level, the way to think about labs 2.0 is [to envision] a portfolio of ideas, products and experiments that range across our business,” Westermann said.

Eastern was one of the first community banks to launch an innovation lab, in 2014. Live Oak Bancshares in Wilmington, N.C.; Radius Bank in Boston; and C1 Financial in Tampa, Fla., which was sold to Bank of the Ozarks, are other examples of smaller institutions that embraced in-house technology initiatives.

“It’s nice to see some of the community banks and regional players taking a page from" a model first used by larger institutions, said Jim Edrington, the American Bankers Association’s chief member engagement officer. Innovation "is critical for the industry.”

Innovation labs have the potential to change a bank's focus by creating a culture of creativity, experimentation and out-of-the box thinking, Edrington said.

Eastern, for its part, aims to spread the message of innovation across all business lines after hiring Ashley Nagle Eknaian, a former managing director of State Street's emerging technology center, as its chief digital officer. Eknaian is also the program development chair of digital innovation for fintech at Brandeis University in Waltham, Mass.

Eknaian said she was drawn to Eastern’s mission and its ability to spin out a fintech upstart as a 200-year-old community bank.

“How do we leverage new technologies in a way that we can really do good and right by our customers and communities?” she said. “I think that’s a really cool application for innovation — it’s not just [bringing] the standard new products to market, but really caring about customers and communities.”

Eastern, which had been investing about $4 million annually into its initial innovation lab, will continue to invest heavily in the effort, Westermann said. He declined to disclose the size of future investment.

Westermann said he also hopes the lab engages Boston’s fintech community.

“There's an incredible amount of really interesting things happening locally in Boston and in the fintech community broadly,” he said. “We want to support that and partner with those companies to boost the ecosystem.”

Eastern plans to create formal programs, which could include a tech incubator or accelerator, though it is still deciding what efforts would have the most impact. Westermann said the bank plans to talk to startups to see what types of programming would make the most sense.

An innovation lab could also help a bank’s branding and reputation, said Sam Kilmer, senior director at Cornerstone Advisors. It is important to spread a lab’s discoveries across an institution to "energize" the entire bank rather than keeping them in a silo, he added.

“Innovation labs have helped to tell a story for the bank around the fact that they take new developments seriously and they're being public about that,” Kilmer said.

Employee engagement at Eastern has been encouraging, Westermann said. The bank’s leaders are looking to ingrain innovation into Eastern's DNA by, among other things, driving home the point that every banker should consider how they can improve the customer experience through emerging technologies.

“We're not starting from ground zero,” Westermann said. “We started three years ago and to be honest, even further back than that. We have a good head start here and it really comes from the tone of the organization.”

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