Academic journal article ABA Banking Journal

Remember E-Commerce? Yeah, Well, It's Still Here: And the Time Is Right to Sell E-Services to CFOs on the Hunt for Utility in the "Dot-Gone" Era, Says eScout's Sandy Kemper. (Dialogue)

Academic journal article ABA Banking Journal

Remember E-Commerce? Yeah, Well, It's Still Here: And the Time Is Right to Sell E-Services to CFOs on the Hunt for Utility in the "Dot-Gone" Era, Says eScout's Sandy Kemper. (Dialogue)

Article excerpt

Sandy Kemper, founder and CEO of eScout, operator of electronic marketplaces, talks about the rise, stumble, and correction of banking e-commerce ventures. Using the web to harness the buying power of an online community of about 20,000, and offering over a 100 different marketplaces, eScout provides an array of web-based solutions, including purchasing, billing, and payment systems. The service began as a special project at UMB Bank of Kansas City when Kemper was president there as a way to sell payments, loans, leases by becoming more closely involved with the commerce process, as banks once were.

"When we began, we said, 'let's own the commerce platform so we can earn first right of refusal on the financial instruments'," says Kemper of the philosophy behind eScout. Later, in 1999, the project was spun off on its own, and Kemper left the bank to run the new venture.

eScout's products and services are marketed through an international network of 1,300 regional and community banks, representing $500 billion in banking assets and serving more than 2.5 million companies. Besides discussing his venture in the following interview, Kemper comments on what's ahead for e-commerce and how bankers can benefit from it.

ABABJ: So what ever happened to the "commerce" in e-commerce?

Kemper: In the beginning, all of us in the industry thought of e-commerce as a revenue-producing opportunity. We tried to think big; be all things to all people in many cases. And, we got ahead of ourselves; we needed to retrench a bit.

Because of the economy, and because of early projects that didn't work or got stuck in development before they could prove themselves, many people got turned off to the overly speculative venture. I don't think the typical corporation, or bank for that matter, is all that interested in projects that aren't too concretely defined. Nor are business people interested in any wild revenue-producing ideas.

Beyond that, many of us in banking thought that knowledge of e-business was going to become a core competency. We believed we could install and run these projects internally, which often proved not to be the case. Distributed computing is an entirely different animal than the mainframe environment. Besides, the pace of technological change is so great I'm not sure that it makes economic sense to do all this yourself.

So we're seeing that services like hosted e-procurement are rapidly growing. Reverse auctions and exchanges are doing well and they are at the center of what B-to-B e-commerce is today.

ABABJ: I take it that much of the operational aspects of e-commerce are getting outsourced to technology firms?

Kemper: Increasingly, yes. Since the economic downturn, companies are scaling back all the non-essentials. Coming out of a recession, the individual that controls spending in an organization is the chief financial officer. He's replaced the chief technology officer who had that kind of untouchable authority a few years ago.

And, as a result, outsourcing in many lines of business is looking increasingly feasible. Where technologists wouldn't want or allow outsiders to come behind the firewall, CFOs look to outsourcing as a cost-effective way to get involved in e-procurement or other e-business processes.

They are also willing to accept the risk given the solid ROI and diminished upfront cost.

And, as ROI and becoming cost-effective are concepts that bankers are well versed in, I think they're in a great position to have meaningful talks with CFOs at client organizations. I really can't emphasize this enough. The average banker had business rather than technological expertise and didn't know how to talk to technologists on any deep level. So a banker couldn't make recommendations where technology was involved in talks with chief technology officers and get taken seriously. …

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