With economic uncertainty in evidence and the dot-com's merit in question, more conservative bankers might be tempted to dismiss e-commerce as a flashy fad.
Doing so would be a mistake, says Susan Landry, research director financial services with GartnerGroup, Needham, Mass. Landry recently penned a report on e-commerce and banking, noting that rather than consigned to the dustbin, e-commerce projects from the financial services sector are very much in evidence.
More banks are also getting with the program, although newer e-commerce projects are also increasingly beyond the scope of online banking, billpay, and even aggregation.
Not that every U.S. bank has a consumer-oriented website, but even slow followers will have to concede that getting one won't differentiate them. This, says GartnerGroup's Landry, is a telling indicator where e-commerce is headed.
"Online banking is starting to mature," says Landry.
"I think it's become a commodity. The really innovative e-commerce ventures have little to do with retail banking."
Instead, today's e-commerce looks to web-enable traditional business processes (see ABABJ October, p.66) both to streamline their own operations and to str.eamline those of corporate clients. Aimed, these days, mostly at corporate banking, these newer e-commerce ventures include use of web tools for cash management, payment and settlement, or credit evaluation.
Quietly being architected at the largest banks, e-commerce is also about injecting banks into the payment portion of supply chain management.
Citibank has several initiatives under way, including the well publicized partnership with Wells Fargo called Financial Settlement Matrix, or FSMX.com.
This comprehensive web service is designed to let buyers, sellers, and financial institutions that use electronic marketplaces close the transaction loop, control costs, and increase revenue, explains Landry.
The site offers electronic access to trade facilities. Services include documentary collections and import/export letters of credit. There's links, too, to lines of credit, including review of multiple options and credit providers, as well as to escrow services via licensed agents. The site also supports receivables management, including selling, factoring or securitizing inventory or receivables.
What's most noteworthy about the project, says Landry, is its clarity. "This is a well thought out project with a definitive ROI," she says. "This is something you'll increasingly see." Certainly, if there is a common thread in today's e-commerce initiatives, it is their practicality. Banks are slowing down a bit to gain perspective, and in doing so, are eschewing the speculative, Landry says. They are replacing out-of-the-box projects with those that look to leverage traditional strengths in new ways.
Case in point is a unit called KeyNext, which is a subsidiary of KeyBank, Cleveland. Targeting middle-market companies from $10 million to $1 billion, the KeyNext portion of the bank's website is designed to provide a suite of e-commerce software packages on an application service provider (ASP) basis with alliance partner Surebridge, Lexington, Mass.
"We want to help our wholesale customers work through the e-commerce maze and get their applications set up properly with our partner, Surebridge," says KeyBank senior vice-president and strategist Pam Carson. Surebridge is a top ten ASP with a reputation for attracting first-rate applications for customer relationship management, enterprise resource management, and contact management solutions, among others. The Surebridge alliance was an ideal way for the bank to expand beyond some of its more payment-focused niche initiatives, including a recently launched ACH payment service for online merchants called NextPay, active since last October.
Carson notes that the same customers that rely on KeyBank for financial advice are grateful for the bank's technology recommendations. …