How innovation strategy aligns with bank culture

Two community bankers share how creating the right innovation strategy includes several essential ingredients, from a bank’s core values to its customers to harnessing the technology to make it happen.

By Colleen Morrison

Innovation comes in all shapes and sizes, and regardless of a community bank’s approach, to be successful, bank leaders say it must align with who they are as an organization.

Quick Stat


The percentage of community banks who rank adopting technology as important or very important

Source: Conference of State Bank Supervisors, “Community Banking in the 21st Century,” 2021

“What we think might work, other banks might pass on right away, and that’s OK,” says Josh Hofer, chief risk and information security officer at $2.3 billion-asset Stearns Bank, N.A., in St. Cloud, Minn. “We know we’re different in approach, but it works for us.”

Tim Shangle, associate vice president of innovation and data analytics at $2.4 billion-asset ChoiceOne Bank in Sparta, Mich., concurs. “It’s really easy to get siloed in the banking world, but it’s when you know all of the different pieces that move around and are able to move between them. That’s our greatest asset.”

That’s why a community bank’s mission, vision and values must drive its innovation strategy…

Tim Shangle: We’re always trying to give our customers something that they need and that they want. Innovation isn’t magic. You don’t need a wizard to make your bank innovative. Innovation simply is something that’s new today that probably will eventually become normal down the road.

Josh Hofer: At Stearns Bank, one of our core values is “constant progress,” and our fintech team always looks for innovative partners that help us advance our strategic priorities to evolve so we continue to be proactive in banking, achieving progress and finding ways to better serve our customers.

…and the strategy starts with the community bank’s—and its team’s—core strengths.

Hofer: One of our strategic initiatives is risk management as a competitive advantage. It’s something that we lead with when we approach any project. We have a really strong team … so we’ve built some internal processes when we go out to do our due diligence on these fintechs, and we all come together as a team and make a decision based on what we’ve found.

Shangle: We’re constantly seeking advice and ideas from all of our coworkers for different ways we can make the bank better, the community better, and bring even more innovation into our bank.

Overall, innovation stems from the customer relationship and how to incorporate both the technology needed to compete and the personal connection that is central to the services community banks provide.

Hofer: We still answer the phone on the first ring, so we’re there to take the call from our customers, but we have the technology, the 24/7 platform for our customers to use when they need it, where they need it.

Shangle: Our customers are going to continually want to use banking in more and more places. Just as 30 years ago they made the move and wanted it online and eventually in their pocket, they’ll now want it plugged directly into whatever app or website they’re using, which will give rise to more banking APIs and embedded banking. Community banks are in a special position where we can remain agile. We’re big enough to do something cool, but small enough to actually be able to implement it.

Hear more from Tim Shangle

In a recent episode of Communities of Innovation, Tim Shangle of ChoiceOne Bank talked to host Charles Potts about how to retain and maximize talent in a tight labor market.

In other exciting podcast news, Communities of Innovation will soon relaunch as Independent Banker: A Community Banking Podcast from ICBA and will cover not just innovation but all topics relevant to community bankers. If you’re already subscribed, you don’t need to take any action.

Colleen Morrison is a writer in Maryland.