The vision for Celent’s Model Bank research, now in its ninth year, is to spotlight effective uses of technology in banking. Each year, in addition to case studies highlighting initiatives within a variety of topic areas, Celent awards an overall winner.
This year’s winner is Eastern Bank. Based in Boston, Massachusetts, Eastern is the largest and oldest mutual bank in the US. In 2014 it launched Eastern Labs, its own innovation center, and is investing 1% of its revenues in continuing innovation. In just 14 months, Eastern put into production an industry-leading small business lending product, developed using the philosophy of Minimum Viable Product.
Through this expanded Model Bank case study, Celent answers three questions.
As Eastern Bank’s 2015 annual report states, “Our recently-established innovation center, Eastern Labs, introduced its first product, providing our small business customers with the opportunity to obtain a loan of up to $100,000 in as little as five minutes from application to funding — completely digitally — representing the easiest, fastest, and most transparent borrowing experience offered by any bank in the United States.”
Eastern has accomplished a significant feat: it built an entirely new loan origination system from scratch, using internal resources, and showed game-changing results on par with anything that the most disruptive Fintech company has achieved in this space. All this occurred without incurring additional risk. As a result, bankers can now spend more time with customers and less time inputting data from paper forms, while customers can obtain funds using what the Wall Street Journal has called the “Coffee-Break Loan.”
The bank’s success provides valuable lessons for institutions of all sizes as they seek to establish the innovation strategies and tactics that are critical if they are to remain viable going forward. The most profound are borne of a radical reconsideration of how banking should be done.
Read Celent's full report here.