For small banks, maintaining a competitive edge against larger and better-equipped rivals has become essential for survival but it's not always feasible or affordable.
But at tiny Ipswich Savings Bank, nestIed in a choice marketplace north of Boston, the decision to install more advanced systems for the mortgage area was not only viable. but cost effective.
The Ipswich-based bank, with only $94 million of assets, has been testing a laptop for about a month in its lending area to handle loan originations from remote sites.
For its small size, Ipswich plans to pack a mighty wallop in the mortgage business - it's already one of the top 10 originators in the busy Essex County real estate market.
But in order to compete with the big-gun rivals that have been drawn to that market - like First Eastern Mortgage Co.. Andover Bank, Shawrout National Corp., BayBanks Inc., and the national mortgage companies like Countrywide and Norwest - the bank's executives saw the need to give their originators and customers easier access to the loan process.
"We knew we couldn't compete in price," said David Gray, the president of Ipswich Bank. "So we have to compete by delivering the service quicker and with better technology."
The laptops allow the loan officers in the field to handle all the steps to prequalification, including comparing products, working out monthly payments, interest expense, and annual percentage rate, and underwriting requirements.
The bankers can also access credit reports and pull them into the application, which can help them to furnish customers with a better idea of whether the loan will be approved. Built-in modems also allow the bankers to download information directly into the centralized computing system at the bank's home office, reducing wasted time and paper.
All told, this can cut the loan process from four to five weeks to about three or four, according to A1 Houston, a bank senior vice president.
Although it may appear to be a small fry, Ipswich has been reeling in some sizable growth m its mortgage area in recent years. Since 1990, the dollar amount of mortgages originated has soared 84% annually. During the period. the savings bank has leaped from 42nd to ninth place in originations in its county.
Last year, Ipswich originated 650 mortgages worth more than $76 million.
Nevertheless, Mr. Houston said, this year the bank will rake in only about $58 million in originations because of increasing competition in a tighter market.
Still, officials said, the substantial mortgage volume justified the $30,000 investment in hardware and software licensing for laptop portability.
"We think it's going to be worth it - this is an extremely competitive market," Mr. Houston said. "With real estate values coming up, the local and regional banks and even the national players are coming in."
So far, the bank has purchased only one laptop for the test, but executives plan eventually to buy one for each of their seven loan originators. And, according to Paul Keenliside, the director of marketing for Computer Software Specialists Inc., the vendor that supplied the system, the small bank has chosen well not to "force this technology down the throats of its originators."
"What we're seeing is smaller banks actually having more success [with this technology] because they're less bureaucratic," Mr. Keenliside said. "They make a decision and they can carry it out."
The incremental cost for lapt6ps, Mr. Keenliside said. has improved to the point that it can be put "in the hands of any originator that wants it."
Whether having this technology in its hands will allow Ipswich to stave off the larger banks that threaten its stake in the market is not clear. But the small savings bank may reap enough in status to make it a worthy investment.
"A lot of business is driven through brokers and we believe customers and brokers will develop more confidence in our ability," Mr. Houston said. "The most important thing in this business is a quick answer."