At a time when many banks are struggling to adapt to a period of rapid change, Berkshire Bank has learned how to embrace technological transformation and turn challenges into opportunities.
Berkshire Hills Bancorp is a 178-year-old financial institution with headquarters in Boston, Massachusetts. Holding around $13 billion in assets, it is the holding company for Berkshire Bank, led by CEO Nitin Mhatre, who was appointed CEO in January 2021. The bank offers consumer, commercial, private banking and business banking products and services, alongside wealth management and SBA (small business administration) products.
Mhatre describes Berkshire as a high performing, relationship-driven, community-focused institution guided by strong values and a vision to give consumers, businesses and communities better access to financial products and services – while maintaining the ethos of a smaller community bank.
Embracing transformation
Recognized as one of America’s leading regional banks, Berkshire Bank has been stewarded by the leadership vision of Mhatre to a new period of high performance amid wider market turbulence in the regional banking industry. Key to this success has been a transformation journey described as B.E.S.T: “Berkshire’s Exciting Strategic Transformation”.
“Increasingly, the pace of change in the technology world has made it imperative that the leaders of banks embrace technology as an enabler to the future,” argues Mhatre. “The banks that will do well are the banks that embrace technology and define their value proposition,” he adds.
"The banks that will do well are the banks that embrace technology and define their value proposition."
For Mhatre, banks will need to consider how they appeal to both the emotional and rational aspects of consumers decision-making. “The question is how do you build a value proposition that's unique to you and how do you make it easier for consumers to access that value proposition, that saves them time, effort and money along the way,” suggests Mhatre. “And then you should consider how do you embrace technology so it's an enabler and not a substitute.”
“For example, everybody’s talking about using AI. But if you’re using artificial intelligence to replace people it will be embraced less, compared to using AI as ‘augmented intelligence’ to help our bankers serve our clients better.”
Integrating the digital with the human
In a bid to capitalize on the wave of digital transformation sweeping the banking sector, Berkshire has sought to optimize all areas of its businesses, processes, and channels.
“The key to that transformation was to look for opportunities for us to optimize and digitize the organization and enhance the value proposition for our bankers, clients, communities and shareholders,” says Mhatre.
“We tried to digitize as much of the bank as we could,” he continues. “We have invested heavily in technology over the last three years; from cloud migration to data warehousing, to CRM solutions, to creating a more state-of-the-art digital experience for the client,” he explains.
This has contributed to an increase in returns on equity from 3% to 10%. But for Mhatre, there is a still room for growth. “While we’re pleased, we’re still not satisfied, because we believe there is significant runway for us to do better,” he says.
Central to Berkshire’s digital and operational transformation has been the bank’s’ DigiTouch™ strategy, which makes banking available when, where and how consumers want it by delivering both the invaluable human connection through extraordinary personal service and the convenience of user-friendly technology. “We have partnered with top notch institutions to provide a digital service while also making sure that if customers have a challenge or service issue, we are able to connect them with a banker they trust immediately,” says Mhatre.
Mhatre believes that this combination of digital services and access to trusted bankers is a key differentiator for the bank. “We can go out to the market and say that we provide the products and services of a large bank while retaining the personal touch of a small community bank,” he explains.
"We provide the products and services of a large bank while retaining the personal touch of a small community bank."
In an inverted yield curve environment, Mhatre’s is also prioritizing rationalization. “We’re focusing on expenses and deposits because that’s going to fuel growth in the future. We’re also focusing on credit throughout the cycle where there are significant questions around credit normalization,” he continues.
“If you manage expenses tightly, find ways to improve your deposit mix and deposit growth, and manage credit through the cycle, you will come out as a winner on the other side of it,” he adds.
A ‘North Star’ for navigating market disruption
Current macro volatility has impacted regional banks, leading to significant market disruption over the last three years, says Mhatre. “The pace of M&A has slowed down in the last few quarters, but these disruptions have actually been beneficial to Berkshire Bank because we are getting opportunities to attract new bankers and clients that are feeling disenfranchised,” he explains.
“We are beginning to see traction growing deposits through the depth of client relationships that we're seeing. We’ve been able to attract banker's clients and even some new executives and board members,” he adds.
Berkshire’s success has also been facilitated by Mhatre’s personal leadership style, which is based on a foundation of strong communication and robust values. “You need to build the North Star for your institution as to what technology does for your bankers, your clients, and your value proposition,” he says. “If you do that, you will have better opportunities to make pivots along the way, because technology changes rapidly. If you decide to completely redo your core system, by the time you get to the finish line the goal post has changed because the technology has changed. An element of continuous improvement needs to be built in when embracing technology and building your North Star.”
Featured Guest:
Nitin Mhatre
CEO, Berkshire Hills Bancorp