Electronic Commerce: Hibernia Sits out an E-Trend: But Bank One, among Others, Still Likes B-to-B

Article excerpt

Though banks of all sizes have recently rushed to set up business-to-business Internet marketplaces, some banks are taking a pass, figuring that these services may turn out to be a fad, or something the bank does not need to offer.

"We are in a wait-and-see mode," said Jeffrey Cross, a senior vice president at $16 billion-asset Hibernia National Bank. "The landscape is uncertain, and a bank my size can't be everything to everyone."

Mr. Cross added, "The people who predict that business-to-business will shoot up are the same people who said we would be a cashless society in 2000, and that ATMs would reduce traffic in branches."

Mr. Cross said many of his small-business customers have fewer than four employees, and the owners are not interested in moving their purchasing activities to the Internet. "When we talk to customers about B-to-B, it can be on the bottom of their needs," Mr. Cross said. "They want good customer service and consistency first."

Hibernia is not the only bank sitting on the sidelines, but the banks that have moved forward with B-to-B shopping services have gotten a lot of attention. Just a little more than a year ago the term "business-to-business marketplace" began slipping into the vocabularies of bank technology executives, and soon the concept was forming the foundation of numerous banks' corporate Internet strategies.

In rapid succession early last year, banks including Citigroup Inc., J.P. Morgan Chase & Co., and Bank of America Corp. announced intentions to build and sponsor online areas where their corporate customers could buy and sell goods. Banks deem themselves natural providers of such services because they can neatly tie all purchasing and accounting activities back into the cash management programs they already operate on behalf of clients.

But a session at the Bank Administration Institute's B-to-B eCommerce conference in Miami last week showed that the industry's rush to build digital marketplaces has not affected all banks in the same way. While Hibernia is shunning the trend, Bank One Corp. is moving headlong into business-to-business electronic commerce.

The relative sizes of Bank One and Hibernia and their corporate cash management businesses may go a long way toward explaining the different attitudes they have toward online marketplaces. Cash management generates $1.8 billion in gross revenue at $273 billion-asset Bank One, compared to $75 million at Hibernia.

But even banks much smaller than Hibernia have chosen to hop onto the marketplace bandwagon. More than 1,800 have joined eScout. …