On-Line Banking/ BAI Meeting Judges On-Line Banking a
Necessity
May 7, 1998
American Banker : Internet banking is no longer viewed
as just an option, judging from comments at the Bank
Administration Institute's direct banking conference.
It has become "a game of survival," Caroline Sullivan,
vice president of Allied Irish Bank in New York.
"We knew that before we came" to the San Diego
conference late last month. "But it was stressed here
even more, from the large banks to the small banks."
Huntington Bancshares of Columbus, Ohio, also takes
its on-line strategy dead seriously, said senior vice
president Chester Thompson. The three reasons behind
its direct, or branchless, banking approach are to keep
delivery costs low, stay in step with the competition,
and stay in business.
Illustrating the expansiveness of Internet ambitions,
Wachovia Corp. vice president Jeanne Howard said her
bank originally set out to retain, and cross- sell to,
customers using personal computers.
Now Wachovia explicitly goes after new customers for
its direct channel. " Our vision is to provide everything
in the branch and more," she said.
Apollo (Pa.) Trust Co., with 8,500 depositors, has a
vision that goes beyond the branch, and even banking.
Apollo earns fees as a local Internet service provider.
According to Raymond Muth, executive vice president,
750 people use the bank's PC product and 600 pay $15 a
month for general Internet access.
Survival does not seem an issue for America Online, the
No. 1 interactive service network, which has
connections with 12 million households that use AOL
for eight million Web hits a day, said AOL senior
account manager Darryl Shrock.
Mr. Shrock is convinced that if a bank builds a service
on the Internet- or, for that matter, through the AOL
BankNow program-customers will come.
"You need to be where people are looking for on-line
banking," he said. "These people want to send in
applications now and should be able to do so."
Excite Inc., provider of a leading Web search engine that
earns money from advertising sales, sponsorships, and
transaction revenue sharing, sees itself as "a channel for
commerce," said James Desrosier, executive vice
president of Excite.
Mr. Desrosier, previously chief marketing officer at
Infoseek and before that senior vice president of global
brand marketing at MasterCard International, added,
"There will be billions of dollars from commerce on- line
faster than you can think."
A part of the Internet banking equation that does not
have to worry about survival is the customer, which is
one reason for bankers' growing interest.
Jacques Driscoll, senior vice president of National Bank
of Commerce, Memphis, said its average Internet
banking customer is aged 25 to 55, a homeowner, a
professional or manager, earns more than $55,000 a year,
keeps a deposit of $12,000, and is typically 77% more
profitable than the average retail banking customer.
National Bank of Commerce has been catering to such
customers since October 1997, when it launched its
Internet banking service with software from Security
First Technologies and Hewlett-Packard Co. Today, 4%
of its retail households are Internet-enabled and 11% of
the Internet banking customers are paying an average of
7.2 bills a month, each averaging $231.
Over the next few months, 70% will apply for credit over
the Internet and 30% will use it to open new accounts.
"The more educated, active consumer wants
anytime-anywhere banking," said Mark LaPenta, group
manager of Summit Bancorp affiliate Summit Services
Corp. in Ridgefield Park, N.J. "We feel customer
retention is our No. 1 reason for doing electronic
spending. We're adamant that our Web site only works
if it's a personal experience."
Payment Systems Inc., Tampa, reports that visits to
bank branches are declining as PC usage, telephone
banking, and automated teller machine transactions are
increasing.
Branches, however, still function as transaction centers.
About 12% of tellers' time is spent selling products, 18%
resolving problems, 18% doing administration, and 65%
carrying out transactions. Most customers still go to
branches to make deposits or obtain cash.
On-line, the PSI research shows, the primary activities
are to track checks that have cleared. The key barriers to
increased usage, said Neal Chambliss, group vice
president, are lack of security and privacy.
Banks are in a position to assuage any fears. PSI data
indicated 63% of on- line households trust their bank or
credit union as a source of information about the
security of transactions. MasterCard and Visa scored
53% on that question, Netscape and Microsoft only
22%.
"We believe seamless access to accounts will emerge
and proliferate in financial services-among banks and
nonbanks," Mr. Chambliss said.
Kathryn Jackson, principal of Response Design Corp.,
Ocean City, N.J., predicted the number of call centers
and calls coming into them will grow by 30% a year.
David Grant of PNC Bank Corp., Pittsburgh, went so far
as to label the call center "the nerve of the bank."
"The word 'call' will disappear in favor of a word like
'contact.'" said Andersen Consulting partner Chuck
McDonough.
This calls for advanced technology. "An integrated
architecture is what you need," said Michael Sanchez,
chairman of Sanchez Computer Associates, Malvern, Pa.
The challenge is not so much the integration of the
customer information file into the call center, said Mr.
McDonough, but in having a customer data base that is
up to the job in the first place.
"Very few people do," said the Charlotte, N.C.-based
consultant. "They don't have the concept, let alone the
technology."
An integrated approach ensures customers get
consistent service across all channels. KeyBank of
Cleveland, for example is aiming to run the same
applications on desktops in both its call centers and
branches.
"At some point you are going to have to integrate
phone contacts with e- mail contacts," said Paul
O'Malley, vice president. That gives bank
representatives a completely updated look at customers'
dealings.
Besides paying attention to technology, banks need to
spend money and time on their call center staffs,
according to Ms. Jackson of Response Design. Call
center turnover rates average 36%, she said, and it costs
some $1,200 to hire and install a replacement worker.
Gary Meshell, the former Price Waterhouse consultant
now with Benton International in New York, warned
bankers to watch out for MSFDC, the joint bill payment
and presentment venture of Microsoft Corp. and First
Data Corp.
"My belief is that banks need to be the aggregators, not
MSFDC or the telcos," Mr. Meshell said.
He said an MSFDC alternative, the bank-dominated
Integrion consortium, " will become the shining star or
else sizzle out in the next few months. My message to
Integrion is to get your act together because the
banking industry needs you." Copyright c 1998
American Banker, Inc. All Rights Reserved.
americanbanker.com
By CAROL POWER
|
