Bank of Guam is hitting its stride in its quest to become a digital-forward bank.
The $2.6 billion-asset institution, headquartered in Hagatna, Guam, has been stacking up wins over the past year. It introduced online deposit accounting opening with
"We have been very aggressive," said Lesley Leon Guerrero, chief experience officer at Bank of Guam. "We've been going after a lot of these things for many years, and all of a sudden they just fell into place."
Bank of Guam faces layers of complexity not shared by
The mysteries of the undersea cables that connect the U.S. territory of Guam to the rest of the world mean that multifactor authentication texts sometimes come through and sometimes do not. The nuances in regulation between
But it faces other challenges that will be familiar to
Q2 has a handful of bank customers in
"You would equate them to a smaller credit union, community bank or very small regional bank in terms of size, asset base and staffing," said Dallas Wells, senior vice president of product of Q2.
There is the question of finding vendors who can support the bank's ambitions and lend engineering help where needed. Bank leaders face decisions about how to prioritize modernization projects, especially with a small staff, and how to source or
"Our challenge right now is we are live with so many things and we don't have the resources to fully capitalize on all of it," said Leon Guerrero. "So we have to focus."
The Bank of Guam has locations in the U.S. territories of Guam and the Commonwealth of the Northern Mariana Islands, or CNMI; the freely associated states of the Federated States of Micronesia, the Republic of the Marshall Islands and the Republic of Palau; and California, where its commercially focused subsidiary Tasi Bank is based. (Tasi means "wave," in Chamorro, Guam's native language.) Bank of Guam's competitors on the island of Guam include
Digitally forward
One project on Bank of Guam's radar is creating a "branch of the future."
The first redesigned branch of this nature opened in Guam in August 2023. There are teller "pods" instead of teller lines; customers check in with a QR code upon arrival and receive a text when their appointment is ready. Universal bankers, or "familia ambassadors," teach customers how to open an account online or make a remote deposit.
For the next tech-forward branch, the team is planning separate spaces for retail and commercial customers.
"Branches should be retail focused, so instead of sending our business customers there, we want to create and build a space and experience that is better suited to their unique needs," said Leon Guerrero.
Bank of Guam is also navigating digital banking initiatives.
It is hoping to ramp up Cara's capabilities, for instance to block or unblock cards and set travel notices. Bank of Guam recently sunset its voice banking capability because Cara has taken over those functions, such as inquiring about balances and transferring money between internal accounts.
The library of APIs mean "we are no longer chained to our legacy core's communicator," said John Reyes Jr., director of business innovation at Bank of Guam.
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Other upgrades come with hurdles.
While Q2 supports online account opening in Guam and CNMI, where the bank is regulated by the Federal Deposit Insurance Corp., Bank of Guam has struggled to make this capability available in the neighboring islands of Micronesia, the Marshall Islands and Palau. They are considered foreign sovereign nations, and the rules about opening online accounts in these foreign branches differ.
Wells has observed other complexities for banks in the U.S. territories beyond local regulatory regimes with different standards. These institutions have diverse customer bases. Their customers range from those with low incomes and low financial literacy levels to corporate customers conducting business internationally with sophisticated treasury needs.
There has been some trial and error with vendor selection. Vendors must have U.S. servers, even if Bank of Guam interacts with teams based in Singapore or Australia. The bank has found that it can never use a product out of the box. If a resident does not have a traditional U.S. Social Security number, for instance, they may only be able to start an account application online before finishing the process in a branch so a banker can manually verify their identity. Many residents of the islands have P.O. boxes instead of home addresses, which requires another set of workarounds if a customer wants to apply online.
Making it work
From the point of view of Bank of Guam's vendors, this is all doable, with some tweaks.
"I don't think their challenges are anything unique to what we see in a lot of our community and regional financial institutions in the U.S.," said Paul Clarkson, executive vice president of global revenue at nCino, which services banks in Guam and Puerto Rico. "We've seen some banks in the territories do a phenomenal job with change management."
He finds there are minor differences between operating in the territories and the U.S. — for instance, Guam residents may have a seven-digit identification number rather than a nine-digit Social Security number — but nCino has had to make much larger leaps to accommodate international clients.
Wells agrees.
"For most of our products, [serving clients in the territories] is not drastically different from serving a typical U.S. financial institution," he said. "It was less onerous than we expected."
Small banks in the territories can take advantage of the support Q2 extends across time zones and in different languages, capabilities more often used by the company's larger customers. It's also unusual for a bank of Bank of Guam's size to require localization. Q2 adjusts terminology, currency formats and more in certain fields to suit the local audience.
Speaking generally, Wells finds that banks in the territories have less local competition and higher net interest margins, but must carry higher capital levels and face higher non-interest expenses, such as paying above-market salaries for talent.
"They make extensive use of consultants and partners, and are willing to pay a premium for some technology vendors that is outside of what is typically seen for institutions of their size," said Wells.
Bank of Guam often leans on vendors for managed services because local engineering talent is scarce.
Reyes Jr. has made the long trek to attend American Banker's Digital Banking conference over the past three years to stay on top of bank innovations.
"I like to listen to other banks share their digital transformation," he said. "It's that reassurance we're not that far behind."
