Eastern Bank: Celent Model Bank of the Year 2016

by Daniel Latimore, April 13, 2016
Case Studies
North America

Abstract

Celent names Eastern Bank the Model Bank of the Year for 2016.

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.

This 36-page report contains two tables and 17 figures.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

 

Key Research Questions

1

Introduction

3

Making Innovation Happen: Eastern Labs

4

 

The Genesis

4

 

May 2014: Eastern Labs Launches

4

 

The Process: Innovating Within a Bank

8

The Small Business Lending Platform

12

 

Small Business Lending: Original State

12

 

Developing a New Product

13

Lessons for Banks

22

 

Bank

22

 

Innovation Engine

22

 

Products

23

Notes on the Model Bank Process

25

 

Model Bank Overview

26

 

Summary of Model Bank Award Winning Initiatives

28

Leveraging Celent’s Expertise

32

 

Support for Financial Institutions

32

 

Support for Vendors

32

Related Celent Research

33

Sign in to download reports and access personalized information