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Non-Tech : NetBank(NTBK)-formerly Atlanta Internet Bank -- Ignore unavailable to you. Want to Upgrade?

To: $Mogul who wrote (1426)	4/12/1999 8:47:00 PM
From: Doug (Htfd,CT)	Respond to of 2414

So, why can't big banks start selling on the Net, too, and keep up with pure Net banks' "frictionless" scalability? One possible answer is in an article entitled "Danger: stealth attack" on page 88 of the January 25 issue of Forbes. The piece is about Professor Clayton Christensen's theories laid out in The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail (Harvard Business School Press; $19.25 at Amazon.com). Christensen presents example after example of how fatal threats start as low-quality, low-margin products that customers can't use and don't want. The great firms yawn, and scoff. Until the new product or service grows in utility until it fills your customers' needs faster, better and cheaper. Christensen calls a new product sneaking into an established market a "disruptive technology." Andy Grove, Chairman of Intel, calls it "the Christensen Effect." Forbes calls it the "stealth attack." Forbes: "The Internet is the Godzilla of stealth attacks. Once a cumbersome tool wielded only by academics and nerds, today's Web challenges not just retailers but everyone from venerable Merrill Lynch and Aetna Inc. to high-tech Sony Corp. and Microsoft Corp." But don't big, excellent firms have the ability to counter these stealth attacks with their greater resources? Maybe not. Forbes: "What to do if you're under fire? Christensen contrasts Digital Equipment Corp.'s and IBM's forays into PCs. DEC tried and failed four times, always from within its mainstream organization. It was a halfhearted effort at first, reflecting the early view of DEC founder Kenneth Olson that the PC was just a toy. IBM put its PC unit in Florida, far from its New York base. There the undistracted IBMers could fit their technology and costs to the smaller-margin PC market. They created a smash hit. IBM's share of the PC business later faded, after it linked the PC unit more closely to the rest of IBM. " Source at forbes.com Big, traditional banks are run by executives with decades of successful experience in the traditional methods. To adapt their entire organization to the economics of networks quickly is not in the fundamental culture of their large, hierarchical, bureaucratic organizations. Look at how long it's taken Merrill Lynch to wake up to online brokerage. Schwab was able to adapt, and has passed ML, just trying to keep up with E*Trade. The same thing is now about to happen to the banks, and companies like NTBK and SONE are going to do very well, because they are establishing the new business models that the traditional banks must adopt eventually. And for many of the traditional banks, it will be by becoming part of a primarily Internet bank ... and for many, it will be in the same manner that Digital Equipment became part of Compaq, and that CompuServe became part of AOL. Doug (long NTBK, SONE, SCH & EGRP -- no position in CPQ or AOL or ML) dougsimpson.com

To: $Mogul who wrote (1426)	4/12/1999 8:52:00 PM
From: Robert Holmes	Read Replies (1) \| Respond to of 2414

Big banks can't match NTBK, they would become profitless or have to offer their traditional customers a worse rate than their online customers in which case all their lucrative business would switch to the online banking which is defacto my first point.