Salem Five keeps looking ahead

By PAUL LEIGHTON

The rush to offer online banking is now in full force as banks of all sizes try to meet the demands of their customers.

Officials at the Salem Five Cents Savings Bank can be forgiven if they glance back at the oncoming horde with a wry been-there, done-that _ not to mention a going-here, doing-this _ look on their faces.

The 145-year-old Salem Five was one of the first banks in the country to establish an online service six years ago. Its pioneering work has drawn national media attention and its Web site has annually received higher rankings than those of many larger banks.

But according to William Mitchelson, Salem Five's chairman and CEO, the same entrepreneurial spirit that allowed his bank to jump first into cyberspace has already propelled it into the next phase.

In October, Salem Five opened what it calls a "virtual/physical" bank in Boston's downtown financial district. Customers can visit a real teller or go directly to one of five computer kiosks to bank online.

What makes this branch different is a third option that involves both people and computers. A customer can sit down at a computer, put on a headset, and talk to a bank employee from the Salem office who can been seen on the computer screen. Documents can be signed and sent back to the Salem office via a scanner.

Mitchelson described the Boston branch as both "high touch and high tech."

"It's not an either/or situation," he said. "When you walk in the door someone will immediately greet you and ask you what type of service you would like. You can either do it yourself or we'll do it for you."

That blend of `virtual' and `physical' _ of click-and-mortar and brick-and-mortar _ is key, said Mitchelson. While some people are very comfortable banking entirely online, others need the reassurance of a secure-looking building and a smiling face at the teller window _ or at least on the computer screen.

"Some people feel uncomfortable sending their money into cyberspace without knowing there's a physical bank behind it," said Mitchelson. "Money is a different commodity. Trust is a very important element, and one aspect of trust is physical security. That's why banks usually have very imposing buildings and big lobbies."

The fact that Salem Five is offering more ways for customers to bank does not mean they have to use them, said Mitchelson.

"We're not trying to force people into a certain delivery channel," he said. "We wanted to give people a choice. We've tried not to change customers' behavior."

All of the new `delivery channels,' of course, help a smaller bank like Salem Five extend its reach in the marketplace. Most of the bank's 6,000 online customers are in Eastern Massachusetts, but Salem Five can boast of having customers in 50 states and 14 countries.

Since it costs the bank less to serve online consumers, they generally receive lower fees and better rates. As of October, Salem Five's online customers had contributed more than $100 million in deposits.

Mitchelson promises more innovations, including a possible "affinity group" deal in which the bank would align with another business in order to reach their customers.

"You've got to have a philosophy of entrepreneurship where if somebody has an idea they're not afraid to express it. If you study it to death it's not going to get done," he said.

"Our philosophy is if you stay still you're actually going backward because somebody else is moving. If you're not planning for the future you're basically planning for oblivion."