Academic journal article ABA Banking Journal

Update on Security First

Academic journal article ABA Banking Journal

Update on Security First

Article excerpt

Security First Network Bank, the thrift subsidiary of Cardinal Bancshares, Lexington, Ky., that was widely hailed as the first bank to conduct transactions on the Internet, seems to be growing at a good pace. In mid-March, it had more than 2,000 customers, up from 750 in October, and was signing up about 37 accounts a day. In March, checking account balances averaged $1,000, while in October the average was $400. The bank's Web site has begun to provide images of checks the customer has written and continues to offer CDs, checking accounts, fund transfers between accounts, and electronic bill payment (through Checkfree, Columbus, Ohio).

Security First and Total Systems Solutions, Columbus, Ga., have agreed to roll out an SFNB credit card in May. SFNB intends to put physical branches in places where heavy Internet users tend to live, such as California's Silicon Valley; Cambridge, Mass.; and Atlanta. It is following Charles Schwab & Co.'s example of putting one small branch in each major location, so that when necessary a customer can open an account, drop something off, or talk to somebody face to face about a problem.

Cardinal Bancshares plans to put its other savings bank, its four banks, and its trust company on the Internet sometime this year. Security First, which is expected to be spun off from Cardinal and merged with software company Five Paces later this year, plans to partner with brokerage firms, insurance companies, and other financial services companies to provide Internet services.

To date, the 'Net bank's claims of Pentagon-strength security have held up. SFNB CEO Chip Mahan says hackers have made thousands of attempts to break into the bank, none successfully.

New alliances. The other face of Security First, the one that offers the software the bank uses to other banks, has formed alliances that should improve integration and support for the products. Nine U.S. banks have signed up for the total package so far (including the original three--Wachovia, Huntington, and Area Bancshares, Owensboro, Ky. …

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