Eastern Bank has licensed 30 bankers working at its branches to allow them to provide annuities to clients.

By taking full advantage of financial modernization legislation, most banks you enter these days will offer services that a decade ago were inconceivable.

That explosion of services is reflected in the decision last week by the U.S. House of Representatives to rename the House Banking Committee to the Committee on Financial Services, folding the House Commerce Committee’s jurisdiction on securities and insurance issues into the newly formed committee.

While bankers had been allowed to enter into some financial services outside traditional banking products prior to the Gramm-Leach-Bliley Financial Modernization Act of 1999, the legislation had a reassuring effect on local bankers, said Daniel J. Forte, president of the Massachusetts Bankers Association.

“Because we had federal modernization bills floating around for the last two to three years, it did give banks in particular, as well as insurance companies, a comfort level that Congress was seriously looking at this. They knew that it had to be addressed and that as long as they stayed within certain parameters, they wouldn’t be too far off given certain legislation they had seen [coming],” said Forte.

“What Gramm-Leach-Bliley did was explain what the rules were going to be,” he said.

Dozens of banks in the commonwealth have expanded services into the insurance realm, including the $3.4 billion-asset Eastern Bank.

Speaking on Congress’s recent move, Mark Primeau, executive vice president in charge of the consumer banking unit at Eastern said, “I think it’s probably going to streamline legislative initiatives. The whole financial services industry is consolidating, so I think it’s logical that legislative oversight be consolidated in one group that can consider all the various issues. I think having a consolidated committee is a good idea.”

Although Eastern has long acted as an informal advisor for investment management, it recently branched out into the retail end of investment services.

Within the last 60 days, the bank has licensed 30 branch bankers to be able to provide annuities to clients, said Primeau.

“As part of that, they go through a relatively simple but effective financial profiling discussion with clients, discussing their overall assessments and financial goals. If it seems suitable and appropriate, they will suggest one of our products,” he said. “It’s a brand new program for Eastern, and one I think you’re going to see more banks get into as time goes on.”

Eastern has also expanded its whole investment and asset management and personal financial planning programs through a new venture for the bank.

“In the case of licensed retail bankers, that’s a brand new program – and in the case of the overall financial and investment management planning, that’s something we’ve expanded dramatically through the establishment of an investment counseling firm last year,” he said. That firm is called Beacon Asset Management; the bank has also established the Boston Private Asset Management Group.

Eastern expanded its services into those fields in a reactionary mode, Primeau explained. “Clients obviously are pressed for time; they look to their bank or their financial institution for the ability to be able to receive sound financial advice over a large spectrum of services. These are services they need, and they are going to go somewhere else to get them if we don’t provide them,” he said. If the clients need to go to a Merrill Lynch, for example, that company will encourage customers to get a credit card or checking account through them – and the customers will likely do it out of convenience.

“So you see here a convergence of all the financial services industry, and the banks’ response is ‘boy, we have to be prepared and able to provide these services to our clients or they will get them somewhere else.’ If they do, the chance of us losing the relationship increases, so we have to be as sharp and as good and as diverse in our offerings as any of the other financial services companies around, or we are not going to be able to compete.”

But while Eastern enjoys significant name recognition in the region, other smaller banks do not. According to Primeau, name recognition is a concern but in the long run, clients may be more concerned with other things.

“What a lot of people don’t realize is that there is a huge amount of asset management in Boston that’s done by firms that no one’s ever heard of,” he said. Primeau compared a bank’s service to a Fidelity service on the retail side for investments of about $25,000. “They don’t really have full-time relationship managers that sit down and work with people face to face. They work with a lot of people over the telephone. Our business is a very personal-based, face-to-face investment counseling and investment management business.”

Adding to the credibility is the fact that banks have been a trusted institution in this country since its formation. People aren’t uncomfortable with the local bank handling their money, he said.

But that local bank may face significant challenges if it wants to branch out into investment services, said Primeau.

“The biggest challenge is to have the expertise, the staff on board that can provide the highest quality level of service. By service I mean the entire package-investment management, the technology and operational systems, etc. So it’s very difficult for a small bank … to branch out in some of these areas on their own. They generally have to partner with someone or go out and hire a staff and build the systems,” he said.

Infinex, an independent organization owned by a group of banks, which offers investment and insurance products, helps a number of the state’s community banks offer services through shared employees. Donald P. Gill, president of First National Bank of Ipswich – which has assets of $150 million – said the bank is in the process of finding a joint employee with Infinex and expects to offer services in the near future. In addition, over 25 banks have taken advantage of the Connecticut-based Infinex. Calls to Infinex by Banker & Tradesman were not returned by press time.

“Typically, there are always exceptions, but the typical client of a bank that is going to buy something through the Infinex relationship would be someone buying a $25,000 mutual fund or $50,000 into an annuity, or maybe even an occasional $100,000 into a variety of mutual funds, as opposed to the person who has $750,000 … They would really want a lot more higher level of expertise and a custom-built portfolio delivered with a high degree of service and continuity,” said Primeau.

Developing such services isn’t easy for any bank, he said.

“It’s a big challenge, but the most important part of all – the thing that is going to make you a success – is to have absolutely first-rate, qualified people,” Primeau said. “Particularly on the investment management side, when you are dealing with fairly large levels of assets and people’s entire financial portfolios.

“It takes a long time to develop that. You can’t do it overnight. It’s not as simple as selling a more straightforward product like homeowner’s insurance, which is much more of a commodity approach because it is so standardized and has a relatively low financial value.”