A new business tool: Banks tackle the issues of Web site planning

Northwestern Financial Review, Oct 23, 1999 by Mattson-Teig, Beth

The novelty of the Internet is starting to where off as bankers look to the web as a new business tool.

The Mechanics Bank in Richmond, Calif., was among the first wave of banks to embrace Internet technology. "We have been pretty aggressive with technology in general over the last few years," says David Albertazzi, an assistant vice present at Mechanics Bank. The bank launched its web site in 1996, and since then www.mech bank.com has undergone a variety of transformations. "When we first launched the web site it was just a big brochure," Albertazzi says.

The web site that Mechanics Bank customers visit today is vastly different. The site features a financial 11 week in review," community newsletter, links to other business-related web sites, advertising and promotions, as well as web banking capabilities that allow customers to check account balances, transfer funds and even pay bills. Like Mechanics Banks, many community banks are pushing the envelope where Internet web sites are concerned. Bankers are realizing that they need to move beyond the electronic "brochureware" to create an interactive financial resource.

The consulting firm of RSM McGladrey Inc. recently finished a review of web pages for community banks as part of an outstanding web site awards program. "The biggest thing that we saw out there is a lot of banks have brought web pages up initially a few months ago, and haven't made any changes. If there are no changes, people won't come back," says Dean Schumann, senior manager of the Integrated Technology Solutions Group for RSM McGladrey in St. Paul. "Having information out on a web page change fairly often is very important."

Another mistake banks make is to create a web site as part of a defensive strategy. Some bankers are opting for an Internet presence because they don't want to lose business to competitors who offer those web-based services. However, banks that take a more proactive approach are finding that the Internet can open new doors on business opportunities. Once such opportunity is providing links to other financial or business web sites.

Mechanics Bank is one entity that is looking at the profit potential for those links. The bank is in the process of launching a product for business account holders that will allow customers to link to other services such as preferred rates for long distance calling, insurance and office supplies. Providing the link to other business sites has the potential to bring the bank additional fees or commissions for those "referrals." However, Mechanics Bank plans to limit those links to its customer's relevant financial or business needs rather than being a portal to one-stop shopping, Albertazzi says.

Although bankers realize the potential of the Internet, they continue to struggle with strategies for achieving success. In particular, banks are facing three major Internet issues: customer accessibility; maintaining customer relationships; and delivering transactional services.

One challenge for bankers is improving web site access. The number of choices on the Internet is staggering. "It's sort of like a fire hose of information that is washing over users," says Greg Crandell, a product marketing executive in the electronic commerce division at Concentrex Inc. in Portland. For example, a Yahoo search under the keyword "bank" produces a list of 9,955 different sites. Search engines such as Yahoo were launched on the premise that they could provide a vital link for users who are searching the web.

Community banks have a similar opportunity to become the gateway for their customer's online financial needs, Crandell says. When a customer goes on the web, the trick is to get the customer to stop at the bank's web site first. "It's not just providing access, but how to manage the access and become the financial services portal," Crandell says. Banks should be positioning themselves as the online financial resource for their customers, he adds.

Managing customer relationships is another challenge when dealing with the impersonal Internet medium. The solution involves really asking the customer what they want. For example, Concentrex has conducted several Internet user focus groups. The number one thing mentioned is that customers want to be recognized by name when they log on to the site. Just as a bank web site can recognize the user by name, banks should be using that customer's profile to offer customized marketing opportunities via the web site. Bankers also are continuing to explore ways to expand web-based financial transactions - whether that involves a bank's own in-house products or services, or that of a third party.

Another key for successful Internet banking is being able to communicate in "real-time," Crandell says. The bank's web site needs to move beyond functions such as e-mailing a loan application to a customer, and allowing them to return by e-mail a completed return. The web site needs to be more than a glorified fax or mail service. Once that loan application is e-mailed back, it needs to go directly into the processing stage, Crandell says.