To survive future competitive pressures, community banks will have to strike a balance between high technology and personal service.

That was the consensus of the bankers and directors attending a two-day seminar here co-sponsored by the Independent Bankers Association of America and Bank Director magazine.

"Industries that we didn't consider a threat to us five years ago are now doing direct-mail solicitations to our customers," said Gregory Stafford, president and chief executive of North Cascades National Bank, Chelon, Wash. "Community banks can deal with all those challenges, but they have to be able to understand the necessity of adapting and the urgency of adapting."

"Banking used to be pretty simple, but it isn't anymore," said John W. Corey, president of Lafayette Savings Bank, Lafayette, Ind.

Leland M. Stenehjem Jr., IBAA president and president of First International Bank and Trust, Fargo, N.D., said community banks must stick with what has made them successful.

"At the same time," he said, "they have to analyze these other opportunities that are available and decide for themselves if they should be involved."

The 130 people at the conference, representing more than 34 banks from 22 states, agreed that while many of their older and wealthy current customers have not become accustomed to technology, future generations are being raised with it. And the demand for personal service, though important for distinguishing community banks from their larger competitors, will not be enough to sustain hometown banks without high technology, they said.

"Community banks have to embrace technology," Mr. Stafford said. "Our customers now, those with wealth, for the most part have not completely adapted to technological changes. But the next generation has."

Speakers at the seminar noted that community banks today face far more competition than in the past. Many bankers laid off in corporate downsizings have found jobs at credit unions, and larger banks like Wells Fargo have aggressively pursued small-business credits, the heart of community bank lending.

Many of those at the seminar were startled at its beginning when T.K. Kerstetter, chief operating officer of Bank Director, pointed out that even Ford Motor Co. has joined the nonbanks competing for deposits. The automaker has been promoting its mutual fund product to shareholders as an alternative to bank accounts and other funds, stressing the availability of check-writing and better returns.

Others, however, were less willing to jump headlong into technological innovation, citing in particular the high cost of such investments, especially when decisions turn out to be ill-advised.

"The rewards are pretty good if you make the right decision," said Mr. Corey, the Indiana banker. "But the penalties are pretty severe if you make the wrong ones."

"You can make some big mistakes in technology," said Rick R. Messerschmidt, president and chief executive of First Bank, West Des Moines, Iowa. "I'm still buying into this phone crap. Community banks need to find their niche and do it well."

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