Banking today isn’t the same as a decade ago — or even six months ago. Transaction speeds have accelerated to milliseconds. The options on where money can move have been greatly expanded. Even the nature of money itself, from paper currency to electronic transactions, has changed and will continue to change at a lightning pace. The pandemic has only exacerbated this.
While many banks were undergoing a digital and online transformation, research conducted by the Digital Banking Report indicates that the transformation to digital banking has been greatly accelerated by the COVID-19 pandemic.
Demand for digital banking apps is at an all-time high, with many financial institutions large and small working to develop and implement new digital banking solutions.
So where does the future take us?
As founding CEO of Westfield Bank, now the 11th largest community bank in Ohio, Jon Park has a unique perspective on what the future holds — and it’s not all about technology.
Under Park’s leadership, Westfield Bank has grown into a major financial institution, with assets projected to exceed $1.75 billion by year’s end. It serves more than 22,000 Northeast Ohio households and 4,500 businesses.
“When I talk about banking today, I say that it is evolving,” says Park. “We are moving from the concept of paper currency and paper-based transactions to digital and electronic currency. Money is changing its format.
“Banking used to be a place you went from 9 a.m. to 4 p.m., so the behavior of banking is also changing,” adds Park. “The speed at which money moves and the number of options you have to receive and send money have been radically expanded. The whole process from beginning to end is shifting to a digitized experience.”
As with any change, there comes both challenge and opportunity, says Park, especially with a community bank like Westfield Bank
“One of the real opportunities we have in this new banking model is that banking is still a relationship business,” says Park. “It’s built around trust, credibility, confidence and relationships. You need the human factor to make that connection.”
That’s why Westfield Bank’s business model is built on combining traditional human contact with new technological advancements in banking.
“We have a talented team of bankers who build relationships with customers and are available and accessible,” he says. “But our customers today also have access to, and often interact with us, through online transactions.”
Westfield Bank acts as an alternative to larger banking models, “which can feel more robotic and bureaucratic,” says Park. “While we have the same capabilities of some of the larger banks, when you contact us you don’t get a call center where you often get a run around before you can speak with somebody.
“It is the combination of talented employees, relationships and customer focus that is enabled by new technology — they are not mutually exclusive,” says Park.
In addition to personal relationships with its customers, Westfield Bank has established relationships with many professional resources its clients and customers can use, including experts on taxation, benefit plans, insurance, investment management and legal services. Westfield Bank connects its customers to these professionals if they need their services. Technology does offer some other challenges, notes Park, especially with cybersecurity and the volatility in the current market.
“Especially with the low interest rates today,” adds Park. “With the Fed and the yield curve moving down, it’s caused a pressure on the industry that is causing bank stock to decrease in value.
“The other challenge is a lag that still exists between laws and regulations and the increasing use of technology. Although money is becoming more electronic and digitized, there is still a fair amount of government agencies and local counties that don’t accept digitized documents or electronic signatures,” says Park.
The federal government passed the Electronic Signatures in Global and National Commerce Act in 2000. Better known as the E-Sign Law, the legislation made electronic signatures and electronic contracts just as legally enforceable as traditional paper contracts signed in ink. So a digital signature is to an electronic document what a handwritten signature is to a paper document.
“However, even today, more than 20 years later, we still can’t completely use digitized signatures,” Park notes.
That’s because the E-Sign Law does not define what an electronic signature is or what technologies should be used to create one. The law establishes only that E-signatures in all their various forms qualify in the legal sense and leaves it up to the free market to determine which methods will be used, according to the Government Finance Officers Association.
Many types of E-signatures offer very little security. So if someone uses an unsecure, scanned image of a handwritten signature, it could be stolen and used for fraudulent purposes.
However, there will soon be help on the way in the form of blockchain and other technologies that will be used to validate identities. “It could become your signature,” says Park of blockchain, “and it will likely become the standard of how we can verify the authenticity of documents, and whether or not the information on a document is coming from the provider and not an outside source. That will provide some comfort in the marketplace against the risk of fraud and forgeries.”
Rather than eliminate standard contracts, Park sees blockchain more as a reliable platform for verification, validation and authentication.
“And it will be incorporated into the things we currently do,” he adds. “It won’t be a replacement.”
Westfield Bank has set itself apart in an ever-changing industry, and it is using technology to augment and improve personal service rather than replace it.