New products: boosting the output: for too many community banks, the process of developing timely new products is an informal, erratic undertaking. Bank of American Fork, Utah explains how its product-creation technique evolved over the last four years from 'haphazard' to organized and efficient.

• Author: Albro, Walt
• Position: Interview

BANKS TODAY INCREASINGLY ARE TASKED with the need to create effective new--and profitable--products and services.

There are several factors that are driving this demand: the slow-growing economy, the changing regulatory environment and the need for new sources of revenue.

ABA Bank Marketing magazine spoke with a representative of a community bank that has made the transition from having no formal new-product development process to having an organized system that cranks out new products like clockwork.

Bank of American Fork was founded in American Fork, Utah, in 1913. Its assets currently total over $880 million. It is the largest (based on deposits) nonpublic locally owned community bank in Utah. Approximately 280 employees, both full-time and part-time, work at 12 branches and one loan office.

The bank's tagline and brand promise is "Big City Banking/Small Town Service." The slogan is intended to communicate to customers that they can expect all of the products, services and technologies of a "big" bank as well as all the hometown customer service of a local bank.

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The magazine asked Tracey Larson, vice president/special project manager and chairperson of the Product Development Committee, to explain how the hank succeeded in creating a formal product-development process. Our questions and her answers follow below.

Would you characterize Bank of American Fork as a technologically progressive financial institution?

Throughout the fast and furious technological changes that came during the 1990s and 2000s, the bank always staved leading edge. It was among the first banks in the state to offer check images, remote deposit capture and the Certificate of Deposit Account Registry Service (CDARS).

More recently the hank has launched mobile banking, an online financial manager, password token devices for online business banking and other products, at about the same time as big banks have released these same products and services.

These advances were often made due to the leadership of enthusiastic and forward-thinking department heads, who were responsible (or the bulk of the product development process, pulling in other bank employees as needed.

Explain how the bank developed new products prior to 2008.

Prior to 2008, there was no one assigned to be responsible for product development. There was no formal process for developing new products, and most new products were born of the departments to which they were most relevant.

Some initiatives had great difficulty getting off the ground because they did not arise from one particular department and there was no one to champion them. Many new initiatives that included product development were given to individuals on a "special project" basis.

How did that situation change?

In 2008, the vice president of communications proposed a new strategic model built upon the foundation of the bank's brand promise and the "Vision, Purpose, Values" statement that was established a few years earlier. One key element of the model was to establish a process for continual development of new and existing products.

The CKO was supportive of the strategic plan and moved the product development arm forward by tasking the marketing department with product development last same year. The public relations manager and the vice president of communications managed the process, working on assignments from executive management and championing opportunities that looked promising. They demonstrated the model of research, cost-benefit analysis and evaluation that would later become institutionalized.

What were the results of these initial efforts?

Two concrete things came out of these efforts: one was the idea of creating formal product "proposals"; the...