Banking / Financial

Banking Industry: Feeling Optimistic While Coping with Change

Five executives from leading financial institutions in the state detail the challenges and opportunities their organizations, as well as their business clients, face today.

By Anthony Birritteri, Editor-in-Chief On Mar 10, 2025

In this installment of New Jersey Business Magazine’s continuing Business Roundtable Series, conducted in conjunction with the New Jersey Business & Industry Association, we present a discussion on the state of banking. On the following pages, professionals discuss the forces shaping their industry today, including regulations, artificial intelligence, cyber security, fintech competition, market trends and more.

Meet our 5 Panelists

Rebecca O’Connell

Rebecca O’Connell is the regional president and head of middle market commercial banking for the NYC Metro Region at Citizens Bank, encompassing NYC, its surrounding boroughs, Long Island, Westchester and Northern and Central New Jersey. She previously held positions at JP Morgan Chase and Bank of America after spending time in the private sector in a global treasurer/finance & consulting capacity. She is also an NJBIA Trustee.

Michael Affuso

Michael “Mike” Affuso is president and CEO of the New Jersey Bankers Association (NJBankers). Bringing more than two decades of experience in New Jersey government and the banking industry to his position, he advocates for the banking industry before federal and state legislatures. Prior to becoming president and CEO, Affuso served as NJBankers’ executive vice president and director of government relations.

Gregory Garcia

Gregory Garcia is executive vice president and COO at First Commerce Bank (FSB). He began his career at FSB in 2021, first serving as chief risk officer and later, COO. Prior to joining FSB, Garcia served as CFO and COO for William Penn Bank. He began his career in community banking in 2004 as a consultant for the strategic consulting firm, FinPro, Inc.

Vito Giannola

Vito Giannola is executive vice president and chief banking officer at Provident Bank, where he is responsible for leading the branch network, retail operations, sales administration, Provident Investment Services, small business, and consumer and residential lending. He has more than 25 years’ experience in financial services. Prior to joining Provident, he held executive positions at SB One Bank, TD Bank, Chase and First Union Bank.

Edward K. Moran Jr.

Edward Moran Jr. is market president/C&I lending for the Central/Northern New Jersey region of OceanFirst Bank. He manages a diverse team of C&I relationship managers which focuses on commercial banking, asset-based lending, treasury management and other specialties. Prior to joining OceanFirst Bank, Moran held leadership positions at TD Bank and Fleet Bank and has more than 37 years of banking experience.

How are businesses adjusting their borrowing or investment behaviors, considering interest
rate trends?

Giannola: There’s a lot of fluctuating volatility in the market when it comes to interest rates. Since September, we’ve seen a point drop in the prime rate. So, for much of the commercial and industrial business, it’s improved cash flow. We’ve seen a bit of an uptick in people purchasing and refinancing properties. Overall, we think we’re well positioned for growth and to work with our clients in today’s market.

Moran: The biggest surprise to customers is that they read that the prime rate had reduced downward. However, they’re caught off guard with the increases, of late, in long-term rates. … But some clients seem to have a crystal ball. They are looking to use short-term financing for long-term assets with the potential that if [they] need to lock in, [they’ll] do it. But we’re expecting positive results for 2025. There’s a renewed sense of optimism among many of our customers.

O’Connell: Interest rates are starting to come down now, but they stayed higher for longer than we had expected. From a business perspective, that has given us somewhat of a chilling effect on borrowing, credit utilization, and capital expenditures, etc. However, according to our 25 middle-market M&A outlook, there is significant optimism in the market for dealmaking reaching a potential five-year high.

How would you describe the commercial real estate market today?

Garcia: Obviously, everyone talked about office space as being the most vulnerable. We saw that in ‘23 and ’24. Now, we have also seen some weakness in warehouse space as well, which used to be stalwart.

Moran: What is surprising is that suburban office space has been fairly stable relative to urban office spaces in the New York, Philadelphia, and Boston markets. If it’s a class A/class B-type of building in a good location, in a suburban market, we have not been stung or impacted adversely with too many defaults. Even with remote work, there still is a desire for companies to bring people in. Some are looking to take space where they didn’t before.

O’Connell: We are seeing a push for “back-to-the-office” across the board, which has impacted – from an optimistic perspective – office space both in the New Jersey and New York City markets.

Will the back-to-office push have a negative impact on your workforce?

O’Connell: At Citizens, we’ve always allowed for flexibility to ensure our colleagues have that work-life balance. [However, our people] are hungry to be back in the office with colleague engagement. But thinking more broadly and holistically, there could be challenges as you consider the younger generations. They’re looking for the flexibility to be able to work from home whenever they need to. They have proven they can be quite productive and resilient [that way]. So, I do see some future challenges around that.

Giannola: You need the younger generation to be around [the office] for them to learn and have mentors. So, hybrid could work to an extent, but I think the overall culture, especially here at Provident, demands – in a very professional way – that teamwork environment.

Garcia: It’s certainly a challenge trying to attract top-tier younger talent that may be looking to live closer to the city, whether it be Philadelphia or New York. But we try to encourage being part of a community and learning the business from the ground up. As a community bank, our folks are expected to be in the community, and that means being in the office. That’s what we find to be attractive to the younger generation that wants to be part of something. That’s the kind of pitch that we have for them. … They want to be engaged and not just be a cog in the machine.

What is the status of the SAFER Act, which would allow banks to offer financial services to cannabis businesses?

Garcia: It’s pretty much the status quo. There hasn’t been a lot of change other than … at the federal level where they de-scaled cannabis to a lower-level-type drug. In New Jersey, obviously, it’s legal, so we have already taken a proactive approach to start a cannabis banking program. … In the next several weeks, we will probably be opening our first accounts.

Moran: At OceanFirst, we’ve taken a wait-and-see approach. We do permit indirect exposure to cannabis-related businesses. However, for now, we have no immediate plans to get involved directly.

Have you heard anything from the Trump administration concerning the SAFER Act?

Affuso: You have to look at the more conservative red states. They’re passing ballot initiatives on some type of [cannabis] legalization. Eventually, that’s going to move those senators that represent those states. But to me, hope is not a strategy. We have a situation here in which we have a clash between state and federal law, and there’s fervent hope in New Jersey that there’ll be a solution to this. However, the mere question that you’re asking about the SAFER Act – and that it hasn’t been codified yet – means that the solution is not yet at hand. So, I tell people to use caution.

What other recent or pending state and federal regulations are impacting your industry?

Affuso: Mergers & acquisitions (M&As) have purposefully been slowed down [by the federal government]. We have banks in New Jersey that are strong … banks that were merging and doing a great job pulling everything together, then federal regulators just slowed the process. There will be a big difference with the new [Trump] administration, where regulators will be nimbler and look at what the market is actually doing, as opposed to trying to slow the market for the sake of just doing so. I think the [Trump] administration is going to look at the SEC rules surrounding Environmental, Social, and Governance (ESG). That’s going to result in significant changes in the way we do business.

Moran: One last thing to add is [coping with] Section 1071 of the Dodd-Frank Act [which requires banks to collect data on small business lending.] I’m not sure what the metrics are, but adhering to that may result in more cost and time devoted to compliance. That’s going to have a meaningful impact. I’m not sure if it’s going to get kicked down the road with the new administration, but that’s our perspective.

What role will artificial intelligence play in delivering banking services and running your daily operations?

O’Connell: Obviously, this is top of mind across every organization, not just the banking industry. At Citizens, we have a long track record of investing in emerging technologies. We are actively utilizing traditional AI and machine learning through various areas across the business with great success. It’s more so on the service side; how we interact with clients. How can we drive deeper efficiencies, speed to market, speed to response times, etc.? We’re actively pursuing the adoption of generative AI in the future. We’re focusing on internally facing cases to ensure that we have greater control as we’re learning, and making sure our clients’ information is safe.

AI is about optimizing the efficiency model. It isn’t necessarily going to replace existing talent. It’s about freeing up time for people so they can focus on something else. It allows us to become more productive. That’s the big eye-opener for me.

Giannola: It’s also going to be used for delivering efficiencies with fraud detection, regulatory compliance, loan processing, deposit operations … the type of stuff that we can implement, test and validate. It’s not about eliminating people. It’s about being more effective and efficient to allow our team members to do other things that are more proactive.

What’s trending in terms of cybersecurity?

Moran: It’s the weaponization of AI, which is really impacting the whole cybersecurity function. Cyberattacks are both increasing in number and efficiency, where hit ratios are becoming much greater. So, it’s a daily struggle for mostly all banks. And it continues to require more and more investment from them.

Affuso: It’s extraordinarily costly. For a smaller community bank, they’re going to have to spend a sizable sum of money to protect themselves and their customers. It’s a huge challenge. It’s very difficult to stay ahead of it especially when there are multinational actors that are involved in this, that are often funded by governments. So, the ability of a small community bank matching guns with a foreign government is extraordinarily difficult.

What are the positives attributes of working with fintechs?

Moran: They continue to grow in numbers. We’ve been competing against them for years, but as much as they are competitors, we’ve been partnering with a number of them for [certain] services we offer. It’s a “keep your friends close, but your enemies closer” type of philosophy. We’ve used fintechs for new account openings. It started back when Paycheck Protection Program (PPP) loans were being approved by banks during the pandemic. We used a fintech platform to process those loans. So, as much as they are competitors, they are [also] allies. They have partnered with us to make us more efficient.

Giannola: A lot of our core systems do not have the innovative products and services that we need in order to service our customers. So, we must evaluate what fintechs are offering. If we combine with a good partner in that space to reach our customers digitally and beyond, that adds a lot of value to both the bank, the fintech, and, more importantly, to our customers.

Are there any negative aspects of fintech banking?

Affuso: The real risk is: If you’re going directly to a fintech and you have a customer service issue, you can get stuck in a doom loop on phone. [At New Jersey banks] we have actual humans who are based in New Jersey who solve real problems. … It’s a real value that we add.

What is the overall health of the banking industry today in New Jersey?

Affuso: We have a banks being formed by folks who believe that they can gather capital and create a bank. We have banks that are either completing or contemplating mergers, who are seeking to become more efficient. We have more than 60 banks that are members of NJ Bankers, but there are significantly more than 60 banks doing business in the state. We also have out-of-state banks looking to enter the market. … Overall, we have a strong industry here.

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