Looking Forward & Looking Back

Ken Entenmann, CFA enior Vice President and Chief Investment Officer NBT Bank

How have client relationships and expectations changed during your career?
The biggest change in client relationships and expectations has been driven by the availability of information. In the early days of my career (nearly 35 years ago!) investment information was rather limited and most clients received market information after the fact. Most checked their stock prices in the next day’s newspaper or maybe garnered a few market tidbits on the evening news. Today, financial information is just a click away. This makes for a far more informed investor and allows them to track the value of their investments in real time. Transaction costs have declined to near $0. The net result is clients are far more knowledgeable and far more involved in the management of their investments than ever before…and that is a good thing!

Will traditional banking ever establish an interdisciplinary connection with cryptocurrency?
In the near-term, it is unlikely that cryptocurrency will establish an interdisciplinary connection with traditional banking. To be sure, the great expansion of sovereign debt across the globe has raised legitimate concerns about the debasement of fiat currencies. However, it is not clear that Central Banks will even allow competition from cryptocurrencies!

Most importantly, it is simply very difficult to value a cryptocurrency. It does not produce any cash flow (earnings, dividends or interest) so it can be valued like a traditional stock or bond. Determining the intrinsic value of a cryptocurrency is challenging. It is suggested that cryptocurrencies may act as an alternative “store of value,” much like gold has been used in the past. However, cryptocurrencies have demonstrated extreme levels of volatility. For example, Bitcoin has experienced three selloffs of greater than 80%! Hardly a store of value.

Perhaps the cryptocurrency markets will mature over time and establish an interdisciplinary connection with traditional banking. It will take some time. For now, cryptocurrencies should be viewed as a highly volatile and speculative trading vehicle.

How are increased banking and financial services regulations impacting your operations?
As a community bank, NBT is accustomed to operating in a highly regulated environment. As such, we have become adept at adjusting to new regulations. However, technology has dramatically changed the nature of banking. Traditional banking services are quickly moving to electronic/digital platforms. The pace of change has only accelerated. It requires massive investment in technology. The increased use of technology has allowed for new entrants (FinTech companies) into the banking and financial services industries that are not subject to traditional regulations (capital requirements, government oversight and testing, etc.). This will require further regulatory changes to assure that there is a fair and level competitive environment. At NBT, we will continue to invest and adjust to the regulatory environment.

What do you view as your greatest challenges/opportunities going forward?
The pace of technological change creates both the greatest challenge and opportunity in the future. Technology is changing the traditional branch-based banking model. Much like other industries (retail shopping, real estate, travel, auto dealerships, etc.) banking is being “disrupted.” Balancing the use of new technology and maintaining the appropriate number of “brick and mortar” branches will remain a challenge in the immediate future.

However, this disruption also provides opportunity. A bank no longer needs a branch on every street corner to service customers. At NBT, technology has allowed us to significantly expand our geographic reach that extends well beyond our traditional footprint. Today, NBT services 401(k) plans in all 50 states and offers individuals loans for the installation of solar panels across the country. This simply wouldn’t be possible in the old banking model.

NBT Bank offers personal banking, business banking and wealth management services from locations in seven states, including New York, Pennsylvania, Vermont, Massachusetts, New Hampshire, Maine and Connecticut. The bank is committed to providing customers with solutions, tools and personalized attention and is uniquely positioned to offer advanced digital banking services. NBT Bank and its parent company, NBT Bancorp Inc., are headquartered in Norwich, NY. NBT Bancorp had assets of $10.9 billion as of December 31, 2020 and is traded on the Nasdaq Global Select Market under the symbol NBTB. NBT’s Wealth Management division has assets under management/administration of $7.8 billion.

NBT Bank, N.A.
Headquarters: 52 South Broad Street
Norwich, NY 13815
800 628-2265