ConnectOne: How to Build a Better BankOctober 30, 2017
By Karen Kroll
They say necessity is the mother of invention.
Frank Sorrentino, a former real estate executive, had grown tired of the service—perhaps lack of service is more accurate—he’d been receiving at his bank. Often, the employees at his firm, FSS Construction, would start a relationship with one bank, watch it become acquired, and then lose contact with the individuals with whom they’d been working.
So, Sorrentino founded his own bank. Since its start in 2005, North Jersey Community Bank has grown to 21 locations in New York and New Jersey.
In 2012, the bank rebranded to its current name, ConnectOne Bank. The new name is more modern, and reflects the client-service model the bank employs, Sorrentino explained.
A year after its rebranding, ConnectOne raised $50 million in its first IPO, which it used for new capital and growth. In 2014, the bank merged with Union Center. It jumped from about $3 billion in assets to more than $4.5 billion. Not bad for a twelve-year-old bank.
Consider the factors that have been key to ConnectOne Bank’s growth and success.
- Surviving trial-by-fire. Although the bank opened just a few years before the financial crisis, it came through unscathed. “We had great growth during the recession because most banks couldn’t lend,” Sorrentino said. ConnectOne could, thanks to its conservative approach to lending.
- Knowing the local market. Sorrentino’s background in construction and real estate provided a “deep pulse on local market,” noted Siya Vansia, vice president of marketing. That expertise enabled the bank to lend prudently.
- Reimagining the branch. ConnectOne also “re-organized the branch operating model to use fewer FTEs and provide higher level of service,” Sorrentino said. He notes that many transactions that tellers traditionally handled now take place outside branches, on smart phones and tablets. That means that when clients do go to a branch, they typically have transactions that require greater attention than, say, simply withdrawing cash.
- Reimaging employees’ roles. “We’ve fused the two roles (of teller and personal banker) and have universal bankers,” Vansia said. They can handle many transactions that a personal banker or customer service representative previously would have handled, such as opening an account or adding a co-signer. The business hubs can support larger geographic areas than many bank branches, she added.
- Removing friction. Throughout its short history, ConnectOne has made a point of leveraging technology. “We’re all looking to remove friction,” from processes using technology, and often with a mobile device, Sorrentino said. He noted that this is occurring in all facets of commerce, from purchasing books to making dinner reservations. Now, it’s impacting financial services.
While many banks are wondering how to incorporate fintech, ConnectOne is doing it.
Sorrentino pointed out that with many products and services now available at a per-usage charge, they’re affordable for many banks of all sizes. “I see a lot of opportunity to take advantage of technology, to provide an even higher level of service, and allow customers to bank where and how they want,” Sorrentino said. “It’s like any other part of the tech wave.”
In March, ConnectOne launched a tool that allows clients to open and fund certificates of deposit (CDs) online. “You can log on, set it up, and transfer money, all within ten to fifteen minutes, in your pajamas,” Vansia said.
When neither clients nor workers can get to the bank, ConnectOne is able to handle many operations remotely. During the aftermath of Snowstorm Stella in early 2017, ConnectOne employees were able to run the entire bank without anyone in its branches. The software powering ConnectOne’s call center allowed employees to process many transactions from their homes. For example, clients who needed to deposit checks could log onto the mobile app, take pictures of their checks, and remotely complete the deposit. “That wasn’t possible two years ago,” Sorrentino said.
To be sure, FDIC rules require certain transactions occur in a branch, Vansia noted. Even so, ConnectOne has equipped its bankers with mobile tools so they can go out and visit clients at their stores or manufacturing plants, versus waiting for clients to come to them.
Moving forward, ConnectOne will continue to implement new technology.
Management is evaluating a lending product for small- and medium-sized businesses, as well as some payment systems, Sorrentino says.
Banks also will have to invest in data management tools to a greater extent than they do currently, Vansia said. She compares this to the strategies at companies like Netflix, which use customers’ shopping histories to inform and tailor their marketing efforts. By using information on consumers’ preferences already in their possession, these firms are able to use their marketing dollars more effectively. Banks will need to do the same, she added.
While some industry observers have speculated that fintech companies would eventually replace banks, that theory has gone by the wayside, Sorrentino said. The question now is, “how can fintech work with banks to provide a better level of service.”
As he knows from his days as a customer of other banks, “clients want a better experience.”
Karen M. Kroll is a business and financial services writer and content marketer based in Minneapolis-St. Paul. Email: firstname.lastname@example.org.