Community bankers should invest in technology or risk losing customers to larger competitors, Diane Casey, national director of financial services for Grant Thornton LLP, warned at a recent conference here.

"Customers are getting a lot more demanding," said Ms. Casey, addressing about 100 community bankers last week at a technology conference sponsored by the Community Bankers associations of Indiana, Kentucky, and Ohio. "Banks that say their customers don't need these sophisticated delivery channels are probably the banks that are losing customers."

Ms. Casey said small banks can keep customers happy by offering around- the-clock access to their accounts through the Internet, telephones, automated teller machines, and debit cards.

"Customers need real-time delivery," she said. "I would hope that over the next five years all banks will offer electronic access to account information."

Many large banks can compete without physically entering a market. San Francisco-based Wells Fargo & Co., for example, offers small-business loans by mail to customers nationwide.

Community banks are also losing deposits to securities brokers who have made transactions convenient with another technology tool: on-line trading.

Adding such services is expensive for small banks, but many find technology pays off because customers' electronic transactions are cheaper to process than cash transactions, Ms. Casey said.

Once the investment has been made, a technology-driven community bank can gain advantages over competitors. Small banks can adopt new services quickly and use technology to seem larger.

For example, State Bank of Hildreth (Neb.) has a Web site that makes the bank seem bigger than its $22 million of assets, Ms. Casey said.

Community banks' traditional focus on personalized customer service also sets them apart from large competitors.

"There are going to be times when people want to talk to a person," Ms. Casey said. "You need to stress that you're still the community bank that has good service."

Those at the conference, many of whom were shopping for delivery systems, said they plan to improve their banks' technology for their customers' sake.

"In southwestern Ohio, we're seeing a lot of demand for convenience," said Marvin Achtermann, president and chief executive officer of First National Bank of Germantown.

To meet that demand, the $45 million-asset bank plans to introduce telephone banking within months.

First National is also researching further improvements, such as document imaging and on-line banking.

"I am really encouraged by all of the things we can do," Mr. Achtermann said.

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