Central Pacific Bank has gone more than three decades without a major upgrade since moving in 1983 into its main branch in downtown Honolulu.

During that time the state’s fourth-largest bank also admittedly fell behind some of its local competitors in upgrading its technology.

But in what Chairman Paul Yonamine called “a big investment” for a company of its size, the bank hosted a groundbreaking event with city officials Friday to mark the start of a $40 million renovation and transformation project that the company hopes will put it at the forefront of local banking and meet the changing needs of both its customers and the community.

The project, dubbed RISE2020, will reduce the cavernous 12,719-square-foot size of the main branch lobby at the corner of King and Alakea streets to about 3,500 to 4,000 square feet to make room for an indoor- outdoor lanai, coworking spaces and new retail space, possibly occupied by Starbucks, where drinks and sandwiches will be offered as part of a downtown gathering place for Central Pacific customers, community members, small businesses and nonprofits. Part of the second floor of the 22-story building will give way so that the main branch’s ceiling can be raised, and new panels and glass windows will be put in up to the ninth floor. Some of the $40 million will be used for improvements at other branches.

Construction is scheduled to begin early this month with an aggressive timetable to have the renovated branch, including the indoor-and-outdoor lanai, open on Jan. 1. A temporary branch has been built at the site to continue serving customers during the renovation.

Central Pacific also will implement a next-generation online and mobile banking digitized platform and upgrade all of its 84 ATMs that dispense cash to accept cash and check deposits without envelopes.

“This transformation means a lot for our bank,” Yonamine said during the ceremony in the lobby of the main branch. “We were hoping to contribute to some of Mayor (Kirk) Caldwell’s vision to revitalize downtown Honolulu. We think after this transformation that this whole corner by King and Alakea where a lot of people drive down … they’re going to see this bright, illuminating building.”

Central Pacific Bank President Catherine Ngo said the bank, which has more than $6 billion in assets, now has the opportunity to move to the forefront in Hawaii in digital banking.

“We did not consider ourselves at the forefront of technology, and so it’s been really wonderful for us, particularly with Paul … coming in with deep technology experience, that we have the opportunity now in my view to perhaps leapfrog the other banks and to really be the best now in Hawaii in digital banking.”

Yonamine said all ATMs will be upgraded by June 30 and that the new technology for mobile and online banking will come online in the second quarter as well.

“We’re putting in a next-generation online and mobile banking digitized platform,” he said. “We have one (now), but quite honestly, it’s a little outdated. It does well for us here locally, but we’re trying to do best in class on a national basis, so we’re putting in something we think that even people from the mainland or other parts, like people from Japan, will find really attractive.”

When the renovated branch is completed, it will have only four teller stations rather than the 21 it has now. That’s a result of how more customers today are migrating to online and mobile banking.

“Some of our customers still prefer to come into the branch, but many prefer to do their banking from home,” Ngo said. “That is why the direction for the bank that we are evolving to is so much more of a focus on the online and mobile banking platforms. … However, there’s always going to be a number of transactions, particularly with financial advisory serv­ices, trust services, where there’s always going to be a want and interest for customers to meet face-to-face with their banker.”

Yonamine, who took over Oct. 1, 2018, as chairman and CEO of parent company Central Pacific Financial Corp. and chairman of Central Pacific Bank, has digital experience from previously leading 20,000 employees at IBM Japan. He also has networking relationships in that country.

“The board has always had the idea of trying to take the bank to the next level, and today, even more so going forward,” Yonamine said. “There’s going to be a lot more competition, and it’s not just locally. It’s from the mainland, it’s the fintech (financial technology firms), it’s the types of companies like Amazon that are in totally different sectors that are going to come into banking. We have an important legacy. We have over 900 employees and they all have families, and we have to become a strong business to last for the next several decades or the next 65 years that we just celebrated.”

Caldwell, who spoke at the event along with Yonamine and Ngo, said he was looking forward to seeing how much more enhanced the environment would be there once the renovation is completed.

“I’m going to be excited with the CPB lanai where you can get a cup of coffee and talk story in a beautiful, great setting with trees,” he said. “I love the fact there will be interaction with the public in a private institution.”

Central Pacific, founded by nisei (second-generation Japanese American) war veterans, opened on Feb. 15, 1954, to serve the Japanese American community. The inspiration for the bank came from nisei of the 100th Infantry Battalion, 442nd Regimental Combat Team, which included the late U.S. Sen. Daniel Inouye and Military Intelligence Service units.

The need for Central Pacific as well as City Bank (founded in 1959) arose because Japanese-managed banks that operated before World War II had been shut down and seized following the bombing of Pearl Harbor, and members of the Japanese American community said they did not have adequate access to financial resources after the war ended. Central Pacific became the sole survivor when it acquired City Bank for $423.1 million in cash and stock in September 2004.