Trend Watch: Local Banks Adapt, Capitalize

With mergers, morphing regulations, continued innovations in technology and new options for consumers, the financial industry is undergoing a massive amount of change – requiring nimble thinking and quick adaptation. The TCBN tapped some local banking professionals for the trends they are watching – and reacting to – in 2015.


Led by technology, the increasing focus on digital and mobile applications has demanded that banks adjust the ways in which they interact with customers.

Consulting firm Accenture reports that 35 percent of banks’ market share could be in play by 2020 as traditional branch banking gives way to digital players.

The adoption of online banking and mobile apps also plays into the hands of cybercriminals. Where security used to mean alarm systems and guards, now it increasingly means trying to stay ahead of the hackers and scammers.

Banks also face increased competition from non-traditional sources. One need only look at crowdfunding of everything from musical recordings to start up companies to see that it’s indeed a brave new world out there.

The increase in consumers’ use and preference for banking while on the go using smartphones and tablets is a challenge for local financial institutions, but on they are dedicated to meeting.

“Mobile apps and digital (give) clients the ability to bank without having to come in,” said Marc Judge, vice president of client services at Traverse City State Bank (TCSB).

TCSB is among the many local institutions using mobile apps. Consumers now have the ability to not only make transfers and payments online, but also deposit checks – all without ever setting foot in a branch office.

“Consumers can get a check, go home, and take a picture of the check” to deposit it, Judge said.

Mike Worden, president of Honor Bank, sees the trend as a shift toward what younger customers are comfortable with.

“Millennials, who have grown up with technology, are coming of age and will consume an increasing amount of financial services,” he said.

Chemical Bank, which recently merged Northwestern Bank into the fold, also offers a mobile app in an attempt to attract and service customers.

“Online and mobile banking are certainly increasing in popularity and our adoption rates are increasing dramatically,” said Donna McAvoy, president of the bank’s north region. “Customers are using these channels more and more as they want to bank with us on their terms – which are becoming increasingly electronic.”

It’s not just younger people, or even just individuals. Anthony Palumbo, the Traverse City president of First Community Bank, said businesses are also increasingly using digital services.

“If you’re a business, you can run checks through a remote deposit capture machine,” he said.


While businesses and people of all ages are embracing technology for financial transactions, unfortunately so are criminals. The well-publicized breaches at Home Depot and Target are on the minds of consumers, and banks continue to work to make sure their data and finances are secure.

The larger the bank, the larger a target it can be – and those institutions spend correspondingly more time and energy to safeguard their customers.

“Security is a top priority for us,” said Doug Wolf, president of Chase Bank in Traverse City. “We invest $250 million a year (company-wide) in technology and security. We have around a thousand people dedicated to cybersecurity.”

While the size of Chase dwarfs that of local banks, the concerns of customers remain the same. Both Wolf and John Vandervelde, the vice president of IT and CIO at The Bank of Northern Michigan, said security is the responsibility of both the financial institutions and their customers.

“Businesses and consumers must be diligent about protecting their information,” said Vandervelde.


Banks are also realizing the need to protect their turf. Honor Bank’s Worden saID the proliferation of non-bank competitors (known as “neobanking”) in the financial services arena is starting to be felt by banks. Hardware providers, third-party payment processors, and developers of mobile apps being used by both businesses and consumers are chipping away at the traditional financial services model. He said banks, including his, continue to design products to attract and retain customers.

Others see crowdfunding and other innovations coming from alternative sources not as competition but options for clients that banks cannot assist. Jeremy Hawke, the market manager for The Bank of Northern Michigan, said he believes smaller or start up companies often don’t have the equity that a bank needs to be a viable lending partner. “I think crowdfunding will be complementary to us,” said Hawke.

This is not the financial industry of yesteryear and no one knows what’s next, but everyone agrees that change and innovation will continue, especially on the technological side. “Everybody’s going digital. I think this is just the beginning,” said Wolf.