Community bankers often wonder whether they're getting left behind as they see the stories of the great strides in technology that major institutions are undertaking.
It is hard to be complacent when you see other banks put in facilities that allow a loan to be crafted in 10 minutes over the phone or allow a customer to do all his banking without ever entering a branch.
But the question that the community banker must answer before he gets too jealous is: Do I need all this?
Ken Fisher, whose small bank in New Jersey was sold to United Jersey Banks, where he eventually became president, said to me, "When I ran my local bank, I would look people in the face and know if their check was good or if they qualified for the loan they requested."
"Now, we have spent a fortune on equipment, and guess what? Using this high-tech machinery we can push a button and determine whether we should cash a certain person's checks or make him or her a loan. How far have we progressed?"
If you live in a city or suburb, the ATM is a godsend. You can get money 24 hours a day without having anyone know you, just by going to your machine with your magic PIN.
But if you live in a small town, what do you need the ATM for? You go into the local grocery or drugstore and they will not only know you by name, they will cash your check without a question.
Why should the local bank pay for ATM technology that isn't needed in its market?
The same applies to the new approaches to lending.
Loan in Minutes
A recent article in The New York Times tells how Huntington Banks of Columbus, Ohio, can use technology and on-line connection to a national credit file to make loans in a few minutes, without having the customer come into the branch.
How much more effective is this than the procedure I used with my first mortgage, when I called the executive vice president of National Community Bank of Rutherford, N.J., then less than $200 million in assets, and said I had bought a home that weekend?
Different Ball Game
"You got your mortgage," he replied without asking any other questions.
How different his answer was from that of a mortgage officer at a New York City institution whom I had called first because of an ad saying that they had 5% mortgages available. When I said I was interested in a 75%-of-value mortgage and asked it it was likely that I could get one, he replied, "Did you ever lend money on a diamond?"
National Community, incidentally, only charged 5-1/4% then, well worth the quarter point to avoid the implication that I was trying to borrow on a worthless home or at least one of dubious value.
In sum, it is not the technology that makes or breaks a bank, it is what the bank accomplishes with this technology.
Ken Fisher said, "When I was a community bank president, I could sit with a widow and help her finance her son's education. I could help a gas station owner arrange for a second bay on his station. This was banking, not looking at computer printouts."
Defining Your Role
Maybe that's the lesson. What does a community banker do, and what technology is needed to do it?
No one needs telephone banking from the home to help the widow or finance the gas station's expansion.
So the community banker can read about developments like Huntington's and admire them for what they are doing in their market territory, but he can also close his newspaper or magazine and think happily, "Whatever they are trying to solve with this technology is just not my problem."