I was excited to read that Eastern Bank hired the team behind PerkStreet and created Eastern Labs, with the objective of leveraging the bank’s resources and data to build new financial service technologies, and of digitizing the bank.
Dan O’Malley, PerkStreet’s co-founder and former CEO, heads Eastern Labs and is now the bank’s EVP and chief digital officer. A reorganization placed approximately 80 product management, mobile, online, and customer service employees within the new lab. Eastern Labs is responsible for Eastern Bank’s digital channel.
Eastern Bank is the largest community bank in Massachusetts and the largest and oldest mutual bank in the country. In addition to retail and small business banking, Eastern is involved in insurance and wealth management.
Dan had been on the job for three weeks when we sat down for coffee.
Q. Dan, how should we think of Eastern Labs? As an incubator? A sandbox? As a partner to startups? A source of capital?
A. A sandbox is a good way to think about us, though we are more than that. We’re a group of people who like building stuff, and we are looking to partner with other people who are building interesting stuff in the areas of financial services and financial technologies. We have space to share with other entrepreneurs (10 open seats, currently) and we are very interested in cross-pollinating ideas. And we want to talk to everybody.
We are not an accelerator or a venture fund, though we will invest in companies where Labs can collaborate and create value.
Q. Will you have free rein to collaborate with internal partners to explore innovation ideas that are relevant to the business? And with external partners, too?
Q. How are you defining and measuring success?
A. We’ll be successful if we build good, new, exciting technology. We want to build technology that makes life better for Eastern Bank customers and we want to spin out new companies.
Q. Are you going to be integrated with, insulated, or isolated from the day-to-day banking business?
A. Both. Part of the team will be isolated from the running of the day to day business and part of the team is directly responsible for the management of the digital assets of the bank.
Q. How engaged is leadership at the top of Eastern Bank?
A. They couldn’t be more engaged. I wouldn’t be here if Eastern Labs didn’t have the full support of the board of directors and the full senior management team.
Q. What are the implications of Eastern Labs for the broader Eastern Bank culture?
A. We’re bringing the same culture to Labs that we had at PerkStreet. We move fast, speak candidly, work collaboratively, and make decisions with data. Some of the ways we do this are new for Eastern. For the Labs space, we demolished a corner of Eastern’s offices and created a modern, collaborative open floor plan. People are excited about it.
Q. Are you aligning lab efforts with Eastern Bank business strategies or pursuing green field fintech opportunities?
A. Labs gives us the flexibility to run experiments and see what happens. Experiments could yield opportunities in new or existing areas.
Q. Are you looking for incremental improvement, new business lines and sources of revenue, or breakthroughs that reinvent banking as we know it?
A. While some of our experiments may yield incremental improvements, we’re not people who strive for incrementality. We’re in it to change the industry.
Q. Are there specific areas you will or will not be working in?
A. We are very interested in mobile – it’s the future of both retail and small business banking. We are also very interested in P2P lending and alternative scoring models for lenders. We’re interested in any way to get institutional money to retail borrowers, really, even if that means disintermediating banks themselves.
We won’t be focused on security applications or core systems. Eastern Bank has an excellent technology team focused on these areas and I don’t think our team would add a lot of value there. And, we probably won’t do anything with Bitcoin for the time being.
Q. I hear you are hiring.
A. Yes. We are actively looking for data scientist and engineers. Interested candidates should send us an email at this address: firstname.lastname@example.org.
Q. What the best way for fintech entrepreneurs to contact you?
A. Via Twitter. I’m @dan_omalley