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Banking / Financial

Smaller Banks Deliver with Technology

Pandemic-driven online banking trends, combined with financial technology that is now more affordable for smaller banks, are yielding abundant banking options for customers.

Without the massive economies of scale leveraged by larger banks, mid-sized and small banks have often historically struggled to afford emerging banking technologies. … That is until now. The decreasing cost of technology – combined with the coronavirus pandemic’s demand for online banking – has enabled these banks to offer new products ranging from enhanced digital experiences to Interactive Teller Machines (ITMs).

According to industry experts, the pandemic has accelerated consumer digital banking trends by perhaps five or more years. It has compelled set-in-their-ways consumers to use online technology like they never have before; made other consumers utilize certain online banking features for transactions that they had previously handled in person; and likely forever changed many consumers’ banking habits. A 2021 American Bankers Association survey found that 81% of respondents felt that bank technology improvements are making it easier for consumers to access financial services.

And, while some mid-sized and small bankers explain that their adoption of new technology was already underway before the pandemic, either way, customers have more banking options than ever before.

Fintech Pricing and Solutions

Financial technology firms underpinning banking technologies have seen value in offering their products to smaller institutions. In some cases, these technologies are cloud based with “per user” options as opposed to enormous technology flat-fee costs that, again, mid-sized and small banks might not be able to absorb.

Dorian Hansen, executive vice president, chief marketing officer, head of operations and digital transformation at Investors Bank (which has more than 150 branches), explains that with cloud-based software as a service, “A lot of the software that we can buy is what I am going to call ‘configurable’ … Yes, I have an IT department, but I don’t need to hire hundreds of developers to code for me to provide big bank services.”

She also says, “The nice thing that has happened with the cost of technology … is that it has narrowed the competitive gap. Our offering is at least as compelling as the major, national banks.”

Peapack-Gladstone Bank’s Executive Vice President, Chief Information Officer, and Chief Digital Technology Officer Kevin Runyon likewise says, “Three years ago, the introduction of all these fintechs (financial technology companies) was really considered problematic for banks. They were seen as competitors, but, ultimately, they are almost the saviors of community banks because of their technology, their ability to adapt quickly, and their ability to provide us services at a reasonable cost. It has allowed us to compete with the big banks.”

Runyon adds, “What we’ve found is that we have been able to leverage some good fintech companies, and we can not only deliver the same services that the bigger banks [have], but because we are smaller and nimbler, we also can take care of our customers better.”

Along similar lines, at the former Glen Rock Savings Bank, which in October 2021 rebranded as Ascendia Bank, President and CEO Ferdinand R. (Fred) Viaud, says the 35-employee, four-branch bank’s recent devotion to adopting technology, “wasn’t because of the pandemic.”

Viaud explains, “It is an end result of our rebranding: As a small, four-branch bank, we need to remain competitive and relevant in the marketplace. In order to do that, our board realized that we have to do pretty much everything that the big banks do: We’re going to have to open accounts and take loan applications online and have remote deposit capture. … These are all the things that we hope to have in place before calendar year-end of 2022.”

With an up-to-date, new website, internet banking, online bill pay, and a mobile banking application, Viaud adds, “When you go to our website now, it is a vast improvement over the previous website; it is more user friendly. It has the bells and whistles that all of the other bigger banks have, and eventually, that will be used as a doorway to the improved services of which I spoke.”

Specific Products

At Investors Bank, in addition to offering an array of online banking staples as well as the widely adopted digital payments network Zelle – which allows people to pay each other directly (such as for splitting a restaurant bill) – existing Investors small business customers can open new, additional accounts online. And in the first quarter of 2022, entirely new small business customers will likewise be able to open accounts online.

Investors’ Hansen explains that her bank’s ability to access drivers’ license databases and the state’s database of business incorporations, for example, facilitates Investors’ ability to do this – and also provides business customers with convenience.

Separately, in a move beyond online banking options, Peapack-Gladstone Bank is using Interactive Teller Machines (ITMs) to communicate with its customers, with ITMs essentially adding a video component and more transactions to an ATM experience.

“You typically think of an ATM for just getting cash, and for balances,” says Peapack-Gladstone Bank’s Runyon. “[If] you hit a button [on an ITM], you will have someone pop on your screen at the ATM and assist you through your transaction. It was a technology that we rolled out during COVID, and we continue to expand its use as we move forward.”

Meanwhile, the videotelephony product Zoom is also a tool that Peapack-Gladstone Bank began implementing during the pandemic’s onset.

“Zoom is heavily used today,” Runyon says. “Our customers can schedule Zoom appointments with their bankers if they are still not comfortable coming in to have that face-to-face conversation.”


While bankers generally state that financial institutions’ venerable branches will continue to exist in an increasingly digital banking world, the overall online phenomenon is not only here to stay, but is likely poised for even more sophisticated expansion.

Runyon concludes, “Our business plan still has branches with us, but, without a doubt, our future really lies with technology. So, there will be a favorable mix of technology and branches going forward.”

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