Slightly off topic, but interesting online banking twist
Online Bank Lays Bricks & Mortar
By Kimberly Weisul
04/19/99 01:17:00 PM
Security First Network Bank is accustomed to venturing where
others fear to tread. In 1996, it became the world's first
Internet-only bank. But now, just as 2-year-old competitor
NetBank is announcing a stock split, Security First is heading in
the opposite direction: It will be adding physical locations to its
online offerings.
Security First said branches, in-store branches and automated teller machine networks are all under consideration. "We're not looking at a traditional branch structure by any means,"
Chief Executive David Noble said. Instead, according to Noble, the bank will target cities with large online populations and combine kiosks, branches or ATM networks while it launches a new marketing campaign. Noble said he thinks the combination eventually will allow the bank to move into more advisory services, much like those of Charles Schwab & Co.
"At the end of the day, I don't believe a Net-only bank can survive," said James Punishell, an analyst at Forrester Research. He added that banks need to have direct customer contact to sell top-level products and services. D.R. Grimes, CEO of NetBank, disagreed. "I do not think it's necessary to have dual channels," he said. "We've been very successful, and we're Internet-only." He added that the bank is adding about 3,000 accounts each month.
Security First has run a banking location from its headquarters in Atlanta, but Noble said that office looks more like a record store than a traditional bank branch. Since its purchase by Royal Bank of Canada in October 1998, Security First has opened a second branch in
Clearwater, Fla., to provide U.S.-based banking services for Canadians who spend winters there. Noble estimated Royal Bank has about half a million such snowbirds as customers. They're important customers for the bank, and, he said, "they're not really in the Internet mind-set."
To build a network of in-store branches, Security First will need partnership arrangements similar to those Citibank has struck with Blockbuster and Kinko's, said Albert Pang, a manager of e-commerce research at International Data Corp. The ATMs give Citibank customers a way to get cash outside of their geographic location without paying an ATM fee.
By the company's reckoning, Security First currently has about 15,000 accounts. It became the first national Internet bank, but it soon encountered trouble attracting customers.
Security First's technology was attractive to other banks, however, and the bank spun off Security First Technologies to help traditional banks trying to move online.
Royal Bank bought the banking assets and a 5 percent stake in Security First Technologies last October. The purchase licensed Royal Bank to do business in all 50 states and gave it an early window into developing technology from Security First Technologies.
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