World's best Internet banks

Global Finance, Aug 2000 by Rombel, Adam

Identifying the best

Banks traditionally have not received much acclaim for innovation and success on the Internet. More recognition instead has gone to brokerage firms, where the explosion of online trading revolutionized the industry. New Internet trading firms, such as E*Trade and Datek Online, sprouted, slashing trade commissions and bringing many new customers online. After several years of stubborn defiance, even traditional firms such as Merrill Lynch, were forced to offer discounted Internet trades.

Online banking has been much slower to take off. For example, less than 10% of US consumers bank online, while the percentage of stock trades placed over the Internet is double that, according to various research firm estimates.While consumers rushed to save as much as $200 a trade with online discount brokers, such dramatic savings haven't been there with online banking. With higher interest rates on checking accounts the primary selling point, Internet start-ups, such as NetBank, have struggled to make a dent in the business of established bricks-and-mortar banks. There are only 300,000 Web-only banking customers in the United States, according to Gomez Advisors. Not having free access to cash through automated teller machines and the desire of consumers to have a branch office to visit has hurt the online-only banks.

Bricks-and-mortar banks have pitched the convenience of being able to check statements, arrange payments, and make deposits at any time from home to woo their existing customers online. This could save the banks on transaction costs and prevent clients from going to Internet-only banks and Web services that combine all of a consumer's financial and personal accounts in one place. Even Toyota says it may introduce Internet banking as it expands into ecommerce and financial business.

But many banks have struggled with the Internet. It has proved difficult and expensive to link existing legacy systems to the real-time, personalized nature of the Web and to integrate Web sites with branch offices,ATMs, and telephone systems.

"We know of no bank that offers satisfactory e-services," says Richard K. Walker, managing director of financial services consulting at KPMG Consulting. "Online customer service has not been thought out over multiple channels and therefore is not well implemented anywhere, forcing customers to be their own bank clerks."

Still, Global Finance set out to find the most innovative and successful retail and corporate banks in every major region of the world as well as two global winners.

Global Finance editors canvassed consultants, analysts, bankers, and Internet experts for their views before making the final selections.The awards for the "Best Internet Banks" were based on the following criteria:

breadth of product offerings online;

percentage of client base online;

partnerships or alliances that extend online services;

Web site design and functionality;

diversity of access channels.

Clearly, selecting the best Internet banks is an inexact science. As Eric Rajendra, global head of A.T Kearney's e-financial institutions practice, puts it: "The Web site alone has little to do with whether a bank is successful in online banking. It's more about leveraging the online with the offline."

Citibank, a unit of Citigroup, was selected has the Best Global Retail Internet Bank, partly based on the worldwide reach of its Internet services. Citi, which does business in more than 100 countries, says 5.9 million customers around the globe access it online. It offers Internet banking to consumers in 22 countries and is slated to expand to 30 countries. Analysts cited the bank's ability to craft Internet offerings for a local market. For example, it introduced specialized mobile-phone banking products in Poland, Singapore, Hong Kong, and Japan.

BN-AMRO, the Dutch banking giant was tapped as the Best Global Corporate Internet Bank. A major part of ABN-AMRO's strategy has been to make venture capital investments in Internet companies that could provide the bank with technology and Pr expertise to build its Internet capabilities for both corporate and retail customers. The bank invested 200 million in such ventures last year, according to Gerben Kuyper, senior executive vice president of business-to-business e-commerce and private equity.

North America

U.S. banks took the top five spots in both retail and corporate Internet banking but that doesn't tell the whole story. Canadian banks-Bank of Montreal, CIBC and Toronto-Dominion-were lauded by some analysts for being pioneers on the Internet. For example, Bank of Montreal was the first bank in the world to make consumer loans online, says Laura Sterna, an analyst with The Gartner Group. It was also early in building a separate Internet-only bank, mbanx

BELL & HOWELL Information and Learning: Text ends here

BEST RETAIL INTERNET BANKS

BANK OF AMERICA

WEB SITE: www.bankofamerica.com

WEB DATA: 2.3 million retail and small business customers banking online, out of 30 million total customers.