Longtime Easthampton Savings Bank President William Hogan discusses community banking’s future
William Hogan , president of Easthampton Saving Bank. Purchase photo reprints »
NORTHAMPTON — As he reaches the autumn of a banking career that began just as floppy discs were coming into fashion in 1970, William Hogan predicts rapid advances in technology will continue to shape how community banks meet the demands of an ever-mobile customer base.
“I’m guessing that the change of pace going forward will be even more dramatic and we don’t even know what those things are yet,” said Hogan. He plans to retire this fall after 43 years with Easthampton Savings Bank, including the last 20-plus as its president.
From the “explosive” rise in mobile banking to a new service that allows customers to deposit checks simply by taking a picture, technology tops the priority list for local banks that are keeping pace to meet customers’ needs for bank information fast and from anywhere.
In a wide-ranging interview last month, Hogan reflected on a career that began at the bank’s Main Street headquarters in Easthampton where he “did a lot of everything because there weren’t many people to go around.” He also cast his net into the future, predicting that technology will continue to revolutionize community banking in the years to come.
“The things that we’re talking about now, mobile banking and where’s banking going, those just weren’t part of a vocabulary back then,” Hogan said. “Nobody knew what those meant.”
That’s a far cry from 1970, when Hogan, now 65, began his career at Easthampton Savings. Back then, the bank’s lone bank branch had one large computer that took up a significant portion of a back wall and was nothing more than a “glorified adding machine,” Hogan said.
Despite the demand for mobile banking, surveys show customers still want the personal touch they can get at a local branch down the block. The bank branch will likely take on a new, user-friendly look and feel moving forward, similar to Easthampton Savings’ newest branch on Route 10 in Easthampton, Hogan said.
On the eve of his retirement as the longest-serving president in the bank’s 143-year history, Hogan believes Easthampton Savings is in a “great place” moving forward. During his tenure, the bank’s assets have increased from $53 million to nearly $1 billion and it went from one office with 18 employees to a headquarters with 10 branches and 200 employees.
“There’s not reason to think major changes will need to be made,” Hogan said. “The bank is in fine condition. We are one of the top performers in the commonwealth. We had a fabulous 2012.”
On the go
Mobile banking is by far the most important development taking place in banking today, and it comes on the heels of advancements in online banking, Hogan said.
Industry surveys predict that by 2017, nearly half of all customers will use their phones to check balances, make transfers and pay bills, among other features. While they don’t develop the technology — third-party vendors are typically paid to put the programs in place — community banks need to get on board this surge, Hogan said.
“I think in community banking, a lot of us need to be fast followers, fast adopters because the largest of the banks...they’re leading the way,” Hogan said.
He notes that Bank of America is enrolling 10,000 people a day in mobile banking. Sometime this spring, Easthampton Savings plans to launch its own mobile application.
“If that’s the demand that’s in the marketplace and we don’t offer it for an extended period of time, what are the expectations for consumers on us?” he said. “Customers are asking for these services.”
Community banks will also need to stay abreast of up-and-coming technology that its customers will soon demand. One such example is remote deposit capture that allows customers to take a picture of a check and send it to the bank digitally. The service also enables businesses to complete credit card transactions remotely by using a device that attaches to phones.
A banking paradox
Hogan says it is ironic that while the industry develops mobile services that will, in theory, eliminate the need for traditional bank branches, community banks in the Valley continue to build brick-and-mortar branches.
“We still believe that a physical presence is valuable and important as a reminder to people about the bank,” Hogan said. “I believe that there’s still some degree of contact that people want to have. I could be proven wrong about that.”
That said, Hogan predicts branches will undergo dramatic changes in the near future as banks begin to adapt to fewer in-bank transactions.
He points to Easthampton Savings’ newest branch on Route 10 as an example.
That branch, which opened last fall, uses a smaller footprint and offers refreshments, seating and a television to make a customer’s time more pleasant. People sit down to visit tellers, who are trained to handle all types of services from making change for $5 to opening a CD or giving other advice.
“Our new branch is the branch of the future,” Hogan said.
The model seems to be working. Hogan said the bank had nearly $3 million in new deposit accounts in the bank’s first month.
Overall, though, community banks will have to wrestle with the dichotomy of staffing bank branches that are seeing a steady decline in foot traffic and offering services that enable people to bank from anywhere.
“So how do we get more value out of the relationships that we build?” he said. “I think that we are at some sort of a crossroads with that for today.”
Too many banks?
Community banks may not be shaving branches like their big bank counterparts, but Hogan believes consolidation through mergers and acquisitions — not bank failures — will soon happen in the region just as it has throughout the state.
“If you look at the footprint and the growth of brick and mortar and the moderate growth of the banks themselves and their sizes, you quickly come to the conclusion that western Mass is an over-banked area,” Hogan said.
As bank earnings, or margins, continue to shrink while other bank expenses rise, some banks, particularly those owned by stockholders, will be forced to consolidate. Hogan said this phenomena is partly a result of a stagnant population growth that forces banks to compete over the same customer base.
Some examples of stockholder-owned banks include United Bank, Chicopee Savings, Westfield and Berkshire. Banks like Easthampton Savings and Florence Savings Bank are mutual in terms of ownership and are not for sale.
Hogan admits life might have been a lot simpler back in the day.
Mortgage loans were completed with a few pieces of paper, compared to the four- or five-inch thick dossiers required today. Hogan recalls sweeping the steps when the bank opened and then taking a deposit behind the counter moments later.
“The world was a whole different place back then,” he said.
He is not suggesting that customers want to go back to the days before ATMs, online banking and even checking accounts. Nor does the bank, which has grown dramatically from its 1970 size and now has a team of senior leaders and staff who handled just under $1 billion in assets last year.
It’s this foundation that awaits a new leader later this year. Hogan said a search committee is in the process of reviewing dozens of candidates for his job.
Once a new person is on board, Hogan said he intends to remain on the board of directors and lend assistance in whatever way he can, though he doesn’t want to be in the next president’s way.
“Nothing will make me happier than to hire someone that does a better job than I did,” Hogan said.
Those are some tough shoes to fill.