Despite its stature as a smaller financial institution, Boston-based Eastern Bank has big ideas when it comes to innovation. Knowing that financial services are ripe for disruption, the bank has partnered with former members of PerkStreet Financial to create a new innovation lab that is designed to create and launch new technologies and services for use within the bank and to sell other financial institutions.
"This is the most excited I've been in my 32 years in the business," says Bob Rivers, chief operating officer for Eastern Bank. "The largest banks can put a lot of resources to these kind[s] of things. As a smaller player we can't do that. We knew we had to partner with people who think differently and stay ahead of the game."
PerkStreet was an online financial services company which offered customers cash-back rewards on debit card spending that shut down in September last year after it ran out of funds. He says he had never had any dealings with PerkStreet, which was also based in Boston, but saw in article in the Boston Globe that they had gone out of business. He and other executives at Eastern decided to get in touch to explore the possibility of working together with the defunct company in some capacity. Members from both organizations worked together for a 90-day trial period before the bank decided to bring the four employees of PerkStreet officially into the organizational fold.
Thus "Eastern Labs" was created, and is headed up by Dan O'Malley, PerkStreet's former CEO. In addition to the former PerkStreet people, 80 employees of Eastern Bank work with the lab in some capacity. The physical space the lab is located in features an "open design," according to Rivers.
In addition to creating new technologies, the innovation lab also will be monitoring the industry at large for emerging financial technology companies to partner with, or possibly outright acquire. "We have an openness to change and a willingness to take risk," he explains. "We may try some things that don't end up working, but celebrate that as a learning opportunity."
In addition to creating technology for Eastern Bank's use, the lab will also look to white label solutions for other community banks to use, notes Rivers. Ultimately, Eastern Labs has no specific directive other than to create innovative financial services technology, whatever that may be. "Our products made here can be about anything," he adds. "It's about delivering better value to our customers in any way."
[See Also: Innovation in Banking: What does the Future Hold?]