Bob Rivers

Title: Chairman and CEO, Eastern Bank

Age: 53

Experience: 35-plus years

Bob Rivers enters his second year as chairman and CEO of Eastern Bank after a packed year in the banking industry that saw a number of developments including the recent passage of tax reform. Having served as Eastern Bank’s president and COO beforehand, and in several other capacities at banks throughout the mid-Atlantic and Midwest, Rivers has seen it all in his three-plus decades of banking. But the Stoughton native knows that 2018 is going to be another big year for the bank, with more in store for fintech, the need for greater preparation to ward off cybersecurity threats and the potential for regulatory reform. Banker & Tradesman caught up with Rivers to discuss his mixed feelings on tax reform, what’s in store for the nearly $11 billion asset bank’s fintech spin-off, Numerated Growth Technologies, and a host of other issues that are likely to arise this year.

Q: One of the biggest recent stories has been tax reform. What were your thoughts on the overall bill?

A: I certainly have mixed feelings on the tax reform bill. It’s very positive for banks and for Eastern Bank. The lower tax rate allows us to build capital faster and make more loans, which allows us to grow our business and our organization to better serve our clients and communities. Since we give 10 percent of our net income to charity, our donations to community organizations will increase as well.

I am concerned though, as a country, about whether we can afford the revenue loss, given the need for significant infrastructure investments in transportation, education and workforce training. For the most part, the shareholders will benefit from the bill and you can see that in the market runup. But it’s unclear whether these additional profits will be invested back into the business and the economy. Yes, there will be more capital to make more loans, but it’s uncertain whether additional loan demand will be there.

I am particularly concerned about the impact upon Massachusetts, especially the housing market due to the cap on state and local tax deductions. It’s positive for people in business, but whether or not those positives translate the way they are supposed to is questionable. After all, we have seen this before. “Trickle down” economics usually doesn’t work the way legislators intend. Financial services benefit from lower taxes and reduced regulation, but the impact may not be as favorable for our health care, higher education and the nonprofit sectors.

Q: Numerated Growth Technologies has been a leader in fintech among community banks, last year developing a digital express business loan platform that allows business borrowers to apply for up to $100,000 and get an answer within minutes. How is the platform doing since launching in 2017? What is Numerated up to this year?

A: The platform was a driver of a more than tripling of our unsecured small business loan portfolio over the last several years. At the beginning four years ago, we spent a number of months thinking about what we wanted to work on with our new Eastern Labs team. Given that the needs of small businesses represent the nexus of our business and our mission, developing a small business lending platform was a natural fit. And it influenced our thinking on our other lending and banking platforms to make them easier to use in digital space.

We are now in the process of recruiting a chief digital strategist to lead our next iteration of Eastern Labs. Although Numerated, or what we refer to as “Labs 1.0,” was a good outcome, we want a broader organizational impact this time. The new team in “Labs 2.0” will look at a variety different technologies and applications towards more partnerships, as opposed to developing our own applications in-house. We are taking a new approach not because 1.0 wasn’t beneficial, but we think we can do more with 2.0.

Our chief digital strategist will be charged with looking at what is going on in areas such as artificial intelligence, cryptocurrency, blockchain and other developments within the payments space. Boston is blessed with real strong fintech ecosystem, so we are looking to better network on multiple fronts as opposed to just one. There is more to come on all of that and certainly no shortage of opportunities.

Q: What are the big issues in 2018 for community banks in Massachusetts to watch for?

A:The big issues have been pretty much been the same for a number of years now. Digital capabilities to meet increasing customer expectations and improve overall client delivery are increasingly becoming table stakes. Since most community banks don’t have the financial or organizational resources to address these needs alone, partnerships with a variety of both established and emerging vendors is increasingly necessary as opposed to a single provider. The need for much greater technology investment is also driven by heightened concerns about cybersecurity, which has become as great a risk to a bank’s safety and soundness as credit and interest rate risk. Although some steps have been taken to reduce the regulatory burdens on community banks, most of the benefits have accrued to the country’s very largest institutions and they are much higher than in the past, putting further pressure on margins, overall profitability and the ability to grow capital and thebusiness generally.

Rivers’ Five ‘New Muscles’ for Development at Eastern:

• Innovation – better understand and leverage emerging technologies.
• Analytics – improve efficiency, mitigate risk, and deliver more value to customers.
• Delivery – increase the ease, speed, and transparency of doing business.
• Advocacy – further support social justice and sustainability causes.
• Talent – develop more robust collective thinking to address increasingly complex challenges in a more rapidly changing world.