Main Street Innovation


Sure, we’re resourceful, but who says community bankers aren’t innovative?

By Mark Field

I recall it vividly, and still somewhat lividly. Several years ago, then Microsoft Corp. chief Bill Gates was widely quoted as saying that banks were “dinosaurs.” I was chairman of our state community banking association at that time, and in my address to our state convention I pointed out in colorful language what Bill Gates could do. And I meant it.

Technology has been a great equalizer for the community banks, because our locally operated institutions have been able to keep up with the latest services through easily scalable technology that has become economical for even the smallest of banks. The lower operating costs of community banks can be a very real competitive advantage, and we have to be creative and innovative and constantly seek out ways in which to save money while also serving our customers’ needs.

A couple of years ago, the longtime owner of my community bank’s core software vendor, Waldorf Computer Systems, began pursuing plans to retire. His company had considered a couple of sale offers from competing software firms, but the owner, Leonard Waldorf, knew those firms would ultimately shut down his software system and force the community banks using it to convert to the buying company’s “standard” system. Our community bank had used this system well and reliably since 1981; plus we were like family to Waldorf.

So some of the community banks using Waldorf Computer’s core system scheduled a conference call. The guy with the biggest mouth on the call, me, ended up asking, “Why don’t we just form a co-op and buy the program and keep it going?”

It took several more conversations, meetings, soul-searching and the efforts of many of the community bank presidents involved before our group formed a charter to establish a core software processing cooperative for community banks. Last year we set up the Community Bankers Alliance Inc. and bought Waldorf Computer’s code. The state of Iowa, where we ultimately incorporated, wouldn’t let us use the word “co-op” in our organization’s name, but that’s what it is—a group of community bankers helping community bankers have a good core system and keep our costs low. We renamed the software program BanCo-op.

To me, that tells the whole story about whether resourceful community bankers are innovators or merely dinosaurs standing around waiting for a comet to hit our earth.

You can be both innovative and scrappy—technologically or otherwise—at the same time. Many community banks are very scrappy. Our institution has been fighting to keep our costs low for the whole 30 years that I have been here. Some of our vendors think I’m crazy when I order parts from them to fix my own equipment. I totally rebuilt one of our coin sorter-counter machines a year or so ago. Those things are expensive. You hate to just pitch it, and you hate to spend $100-plus per hour—including windshield time—for someone else to drive down to do what I can do myself in a couple of hours. There’s not a piece of equipment around The Farmers Bank of Liberty that I haven’t had to “mechanic” on at one point or another.

Don’t spend a dollar when a dime will do. Get what you need. No more. No less. I didn’t grow up during the Great Depression, but I can appreciate the mindset of conserving what you have, because otherwise you may have to do without. It’s a mindset that many community bankers share and operate by.

Of course, some folks outside of our industry may think that we community bankers have not been innovative enough in offering new products or services. But they also have no idea how hamstrung we are by the volume of red tape and regulations we are burdened with, which keeps getting worse every year. And this regulatory burden strikes disproportionately hard at community banks that don’t have a big staff to navigate around all the many volumes of new rules and regulations (so that we don’t get our individual heads dislocated from our shoulders and handed to us the next time the examiners roll in). Considering all the time we have to spend on regulatory to-do lists, we are at a disadvantage compared with some of the largest nonbank entities. No question about it.

But when you stop to think about it, the community bank business model hasn’t really changed in the 112 years that my community bank has been here in Liberty, Ill. Ultimately, we are here to help our friends and neighbors buy cars, businesses, farms and other things that bring economic opportunity to our area and provide a safe place for local folks to invest their money—and keep it local for the benefit of the community.

What has changed at The Farmers Bank of Liberty is how we deliver those services and the level of business we can sustain with X-number of people on staff. Much of the innovation at our community bank has involved process-related technologies, but the ultimate product we offer is one-on-one superior service to the four communities we serve. Technology cannot replace that. That’s in the quality of our people and how resourcefully and creatively they respond to our customers’ needs. Pure and simple.

Innovation means being creative in producing better solutions for various problems and processes. It is absolutely not limited to new technology, even though that’s what most people think of first. Our community bank focuses on base hits, not home runs. We don’t try to capitalize on one big idea, but we are very happy with the many smaller wins on making things incrementally better, saving money at every opportunity, and taking better care of our friends and neighbors.

Innovation at community banks is all about attitude. You have to constantly challenge the status quo. Never be comfortable. Now, you still have to have some aptitude about what you’re doing, but you can be the smartest guy on the block and still not get anything accomplished if you don’t have the attitude to rally the troops and git-r-done.

Mark Field is ( is president and chairman of The Farmers Bank of Liberty, in Liberty, Ill.