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Jim Schmitz

Even as the majority of banking customers have weaned themselves away from their checkbooks to debit card usage and decreased the number of times per year they visit a bank branch, there's still a perception of banking as an old-fashioned industry. That's not a bad thing, says Jim Schmitz, Middle Tennessee area executive for Regions Bank. Schmitz sees all the new technology coming online as more opportunities to improve the relationship between bankers and customers. Jim Rieniets, president of the new InsBank, agrees. Where the two executives agree to disagree, however, is on the efficacy of bank branches—the brick-and-mortar face of banking.

Schmitz is in a unique position to discuss the impact of technology on the banking business. "I remember banking when there were no personal computers on the desks of executives," he recalls. "Then along came ATMs, and the branches were not eliminated, as some folks predicted." From a consumer perspective, banking is still a people business, Schmitz says. ATMs, telephone banking, online banking, remote capture, wireless banking and even futuristic-sounding innovations such as biometrics have not changed or eliminated the need for branches. "Getting a loan, opening accounts—those are still face-to-face transactions. Yes, machines are convenient and, yes, people on the phone are highly trained and have all the systems in place to take care of customer issues, but we still focus on trying to make the banking experience a more personal, rewarding one during those face-to-face contacts."

"Remote capture" has been a buzz phrase in banking for awhile now, and more banks are adopting this technology every day—especially smaller community or specialized banks. Regions Bank offers remote capture, also called remote image deposit or merchant capture. With remote capture, business customers can take the paper checks they receive in-house and electronically scan, transfer and deposit the images with their bank. The result of "Check 21," the Check Clearing for the 21st Century Act, remote capture allows a scanned "substitute" check to serve as the legal equivalent of an original check.

With $140 billion in assets over 16 states, Regions has the wherewithal to implement the most up-to-date technologies, and Schmitz says his bank is a leader in that arena. "We see all the new technology as ways to expand delivery channels and make banking more efficient for customers. In the future, we're going to see more sophistication on the 'treasury management' side. All products will continue to evolve and improve convenience for the customers."

Schmitz points to the increasing number of branches built in the last five years as proof that branches are necessary and represent stability. "I like the idea that customers see us as stable—they expect more from banking than other industries," Schmitz says. "I don't see branches

	Jim Rieniets

going anywhere despite all the new technology."

Rieniets, with InsBank, offers a somewhat different perspective. "Even if you're a bank in the consumer business, trips to branches by customers have significantly declined," he says. "So at InsBank, we asked, 'How many branches do you need for your clients?' We think you don't need as many branches."

InsBank, a small commercial bank with $130 million in total assets, began seven years ago as an effort by independent insurance agents to have a bank to call their own. The initial parties involved were conservative, Rieniets says, and the project started with only $6 million in capital. "We challenged ourselves to start without traditional branches—to use an ACH (automated clearinghouse) conversion project, a short term for debit card transactions; we secured a courier service; and we started developing a business model."

InsBank does not handle coin or currency. Customers use its remote capture service, "Deposit Bank," to scan, batch and submit checks to the bank, which are then credited to their accounts. Over 90% of InsBank's commercial clients use remote capture, and it eliminates operations costs on both ends.

Recognizing that building and maintaining stand-alone ATMs would be counterproductive to InsBank's business model, customers can use any ATM out there, and the InsBank software refunds charges. "The smarter ATMs get, the better for everyone," Rieniets says. He's referring to "smart ATMs," technology that is in its early phase. Smart ATMs will be able to predict customers' typical cash withdrawals and recognize different languages, among other things. Another possible development in banking technology is the remote issue of cashier's checks. "There's some risk," Rieniets says, "but for the properly underwritten client, this would be a plus." Rieniets also sees biometrics—using biological information to identify customers—as part of banking's future.

Rieniets says InsBank, even without brick-and-mortar branches, offers all the bells and whistles a large entity such as Regions offers, but all day-to-day activity is handled electronically, Rieniets says, so using a bank branch as an expensive billboard to demonstrate that a bank is part of the community is unnecessary. While the bank branch has always been the place to handle "customer moments," Rieniets says InsBank creates customer moments by taking its people and services to the clients. Both bankers agree that one of the biggest challenges the banking industry faces is how to balance exponentially changing technology with the inherent risk of fraud in moving data electronically. The more developed and futuristic the technology, the more complexity involved in maintaining security. "We must leverage technology and proceed with the times," Schmitz says, "but we have to take care of the people and their needs." Rieniets agrees. "Our common goal is better and safer movement of data—that is always the priority."

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