Texas Panhandle Financial Institutions Look to Adapt as Banking Goes Digital

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What’s in your wallet? In the near future, the answer may be nothing.

Amarillo banks are bracing for the popularization of digital currency such as Bitcoin, which moves money from hidden accounts without a designated financial institution’s backing. Even for Bank of Commerce President Alex O’Brien, whose McLean-based online bank is no stranger to technology, the prospect is daunting.

O’Brien and Bank of Commerce are trying to determine how the bank can enter a blockchain, the ledger in which “cryptocurrency” transactions are recorded. He sees an opportunity for the bank to facilitate digital currency transfers from person to person with FDIC insurance backing.

Transfers are currently done through unverified third-party organizers, which can be susceptible to embezzling and hacks, as seen in the Mt. Gox scandal that cost customers half a billion dollars.

“I’m scared for the banking industry because I think that Bitcoin and Litecoin, the concepts behind them and the way the blockchain works, is something that could knock banks out of the game,” O’Brien said.

At Amarillo National Bank, vice president Stewart Dodson says he doubts Bitcoin will ever gain mainstream popularity because of its shady roots. The virtually untraceable currency was initially used to pay for illicit “Dark Web” purchases and still carries that stigma.

But at least 95 eateries in 24 states, including Texas, now accept Bitcoin as a form of payment, according to the website Bitcoin Restaurants. The currency’s value has surged 170 percent since the New Year to nearly $3,000 per unit, making Bitcoin purchasing groups popular among daring investors. A Norwegian student bought 5,000 coins for $27 in 2009 and forgot about them until four years later when he realized they were worth $1 million.

Digital currency’s flexibility appeals to O’Brien, who recently applied to up his ownership stake in Bank of Commerce to more than 25 percent.

“It’s a really right-minded concept if you think about it — it’s international currency,” O’Brien said. “There are no borders and it’s not controlled by anyone, which is neat too. I’m a fan and hopefully we can find a way to get involved.”

Companies such as Coinbase have attracted millions of customers by promising secure exchanges to more than 100 traditional currencies.

Jon Laur, chief technology officer for EnergyNet — an Amarillo-based oil and gas auction and sealed bid transaction service — said local financial institutions unwilling to adapt to a new form of money could be left in the dust.

“If (banks) don’t have somebody that knows more about cryptocurrency than your casual nerd on the street, I’d say they’re behind,” Laur said.

Dodson, who oversees ANB’s card center, said he eventually expects some sort of digital currency to become widespread — something with less reputational baggage than Bitcoin.

He said the winning systems will need to gain the general public’s trust in handling their money — a hurdle payment apps such as Venmo and Apple Pay have cleared but Snapchat’s Snapcash hasn’t.

“I think one of the big hurdles, for sure, is people getting used to using money that — I wouldn’t say it’s not real, but it’s a whole new culture and change,” Dodson said.

Automation has changed the way people bank for decades, and added convenience makes workplaces and jobs expendable.

In a region with 6,600 financial sector employees as of 2014, according to the Texas Workforce Commission, lower-level positions could be eliminated or simply not added as banks invest more in Internet services.

Bank of America, Citigroup and JPMorgan Chase combined to close nearly 400 branches from 2015 to 2016 due to increasing demand for digital services, according to Business Insider. At the same time, Bank of America began testing three automated branches where customers can use ATMs and have private Skype conversations with financial consultants.

First United Bank last opened a branch in October 2011, its 15th. Chief technology officer Kevin Carson said rural and regional banks operate under different rules than national players because they tend to have older, less technology-adept customers, and closing branches wouldn’t make sense.

“That’s why we still have branches — because we’re a West Texas-based bank,” Carson said. “Someone in Earth, Texas, is not going to always want to use the newest digital strategies … you have to have a fine line between technological advancements and traditional banking to meet your customers’ needs across the board.”

Assets of banks headquartered in the Texas Panhandle as of Dec. 31, 2016:

Amarillo National Bank: $3.93 billionHappy State Bank: $3.13 billionFirst United Bank: $1.22 billionFirstBank Southwest: $928.05 millionHerring Bank: $419.15 millionInterstate Bank: $173.93 millionCitizens Bank: $151.98 millionFirst Bank and Trust of Memphis: $61.43 millionBank of Commerce: $40.78 millionThe State National Bank of Groom: $34.7 million

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