Peter Alden became president and CEO of Bay State Savings Bank over the summer. He took over the head job at the bank for the retiring Robert Lewis. The Wolfeboro, N.H., native technically still lives there, but has been staying in an apartment in Holden while trying to sell his New Hampshire home.

Here, he talks about what the future looks like for Bay State and why small banks can’t be cheap when it comes to investing in technology.

Peter Alden

Title: CEO, Bay State Savings Bank; Worcester
Age: 52
Experience: 30 years in banking; 5 months at Bay State Savings Bank

Worcester has a number of small banks like Bay State, but also larger banks like Sovereign and Peoples’ United. Do you consider big banks like that your competition?

I consider all banks our competition. It all depends on your breadth of customer and what the target of y our company is. And it is competitive.

Just a couple of weeks ago, First Niagara lifted Sovereign’s entire commercial lending team in one piece. That’s competitive. That’s aggressive.

It’s aggressive and I think people recognize this market as the second largest population in New England. As such, as they look across the landscape of where they may be, they say, ‘You know, there’s got to be opportunity there.’

How has bank competition changed over the years?

It’s changed dramatically. You could spend a day talking about what technology has done as far as product enhancement, as far as product availability, delivery channels. I think we’re all competing in a marketplace that demands those services, that demands that technology both on the deposit side and on the commercial side. The nice thing for a relatively small bank like ours is that technology and the ability to leverage technology, while it’s costly, overall, the expense related to it has come down and allowed us to offer the same products that Peoples United or any of those large, large banks do have.

Is there a right way to do it and a wrong way to do it, or does each bank have to feel through it on its own?

I think each bank has to find its own way. You have to look at what your customer base is, what your target customer is as an institution and your goals and then adapt accordingly. I’ve been at other institutions, and this is the fifth online banking product that I’ve dealt with in my career on the consumer side, and the product we offer here is the most robust that I’ve ever seen. We’re just rolling out mobile banking right now, and that’ll be the last piece of that suite.

Do you see mobile banking taking over for branches somewhere down the line, or will branches always be part of the business?

I think it will be part of the business, but I think it will evolve. If you look at electronic payment volume and its escalation compared to retail transactions, its decline over time, you’ve got to change how you deliver, and that’s true of all your delivery channels. But I do think there is a place, especially in a small institution, for a good retail branch. Our customers want that. Our customers want both the availability of the electronic delivery channels, but they also want to get to a human being, and that’s critically important.

It seems like that would be important for customers doing a business loan or a home loan.

I think that’s true, but I think there is a difference between residential, and the ability to do a residential mortgage or equity line application online, with the follow-through to that being from a human being. I think commercial lending is face-to-face. More often than not, it’s a relationship-building process. I think people in New England, in my experience, whether it’s in Maine, New Hampshire or Massachusetts, on the commercial side, they want to deal across the desk. More importantly, they enjoy having the commercial lender go and see their operation and understand their business. That’s important, that’s how you learn and that’s one of the joys of this business.

On my way here, I heard a radio commercial for Bay State. How has the marketing strategy changed for Bay State and for banks in general?

In the last year, that’s been a new avenue for us. We’re looking out a little more broadly, out beyond Worcester. Reach is important.

The commercial is very careful to mention three or four different towns.

Yes, that’s part of that reach, and you need that. With the ability to scan deposits and those things, for a commercial customer especially, you don’t have to have a branch nearby, so you can reach out beyond where our branch network is, and I think that marketing campaign has had a lot of value for us. Sometimes, it’s hard to measure the impact of an advertising campaign, but we’ve had several loan requests come directly out of that. I think you need that, you need print and you need your website to deliver advertising. That’s where it’s changed. You have to look at different avenues, in a challenging economy, especially.

A lot of bankers talk about reaching a younger demographic. Is that how you do that? Online?

They want online banking. They want electronics. They want the ability to do their banking mobile-y. They do want to talk to a person when they have a problem, but that’s not just true of the younger customer. We do want to reach a younger customer, but electronic banking and the capabilities, especially on the consumer side, goes the whole breadth to baby boomers and beyond. What you do want to do with the younger customer is capture them early. Capture is probably a strong word, but reach them, and get them to understand that a smaller bank can have the capability.

Peter Alden’s Five Notable Differences Between Wolfeboro, N.H. and Worcester:

Population, certainly.

Wolfeboro is very seasonal compared to Worcester.

Worcester has fabulous architecture. I’ve been amazed as I’ve moved around the city. I’m looking at it with fresh eyes.

Worcester has a very, very robust business community, which is a huge advantage.

The education, the colleges that are in Worcester offer such a tremendous amount of diversity of people and diversity and expertise.