Slideshow Notable IT Initiatives from Community Banks

Published
  • March 13 2014, 7:30am EDT
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Community banks and credit unions are often viewed as being behind the curve in technology, but these tech efforts—either in place or in development—show that some smaller institutions can be every bit as cutting edge as the big guys.

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Calif. Bank Crafts Own Credit Ratings

Finance and Thrift, in Porterville, Calif., has figured out how to profitably make car loans to subprime borrowers by automating the decision-making process. The $126 million-asset bank implemented a decisioning tool in 2008—it updated it last year—and credits the software with helping to reduce its annual default rate from roughly 8% six years ago to about 4% today. The software, which was built for Finance and Thrift by Verde Advisor, determines creditworthiness based on estimates of the size, timing and probability of events such as early repayment, the expected economic impact of a lending decision and anticipated monthly cash flow.

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Home-Grown App Monitors Troubled Loans

Like most financial institutions, Greylock Federal Credit Union in Pittsfield, Mass., has been under regulatory pressure to better monitor its riskier lending relationships. It used to be that a loan officer would need an average of two-and-a-half hours to produce a report on a single problem account, but CIO Kevin Zimmer and his team changed that when they built an application that automatically assembles the data and produces those same reports. The application was built using the DNA creator toolkit from Fiserv. Since its launch last year, the $1.2 billion-asset Greylock estimates that it has saved more than 1,000 employee hours. "The review process is like getting a root canal, our app takes a lot of the pain away," Zimmer says.

Customers Bancorp Builds Mobile-Only Bank

Customers Bancorp in Wyomissing, Pa., recently became one of the first banks in the country to provide mobile bill payment by letting customers take a picture of a bill with a smartphone. But it's also in the midst of a bigger project: building a "high-tech, high-touch" mobile-only bank that will target a demographic that feels no particular affinity toward traditional banks. The $4.2 billion-asset bank is building technology to let customers do anything they might have previously done in a branch, such as apply for a mortgage, from a mobile device. It expects to have all the pieces completed and ready to launch on Apple and BlackBerry smartphones by the third quarter. "We want to make banking through mobile effortless and quick, always accessible and, of course, safe," says President Warren Taylor.

Orrstown Heads to the Cloud

Orrstown Bank in Pennsylvania has been undergoing an IT transformation in recent months that has the once-troubled bank—it lost close to $70 million in 2011 and 2012—primed for growth. The overhaul, led by its IT team, includes migrating to a new core processing platform and ambitious plans to redesign its digital channels. The $1.2 billion-asset bank is also one of the few that has moved its employees to Office 365, a cloud-based email service from Microsoft. That move that is expected to improve internal communications and reduce Orrstown's overall operating expenses.

Pictured: The team, from left to right: Jeff Gettle, Chris Thompson, Jeff Deppen, Roger Lange and Justin Shirk.

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Real-Time Decisions on Secured Cards

OneUnited Bank in Boston wanted to let customers sign up for its Unity Visa secured credit card online and get a decision immediately, but it could not find a commercial application that would let them do so. The solution: it built the capability itself. A team led by CIO James Slocum created the Unity Visa Card Me app that is aimed at consumers who are looking to rebuild their credit. The app lets consumers apply for the card and, if they are approved, it allows them to open a deposit account to fund it.

Book-a-Banker Feature Comes to Online Banking

Needham Bank in Massachusetts recently launched an online tool that lets consumers book appointments with in-branch bankers. It's a feature few banks offer and speaks to a broader trend of retail businesses giving consumers the tools they need to get what they want, when they want it—digitally or in physical channels. Beacons, which can detect a mobile app user's presence in the store, could also eventually help bankers' identify who is coming into their branches and potentially influence staffing models.