Academic journal article ABA Banking Journal

In the Zone: More Banks Are Getting Their Web Strategies Where They Want Them. (Community Bank Competitiveness Survey Web Census 2003)

Academic journal article ABA Banking Journal

In the Zone: More Banks Are Getting Their Web Strategies Where They Want Them. (Community Bank Competitiveness Survey Web Census 2003)

Article excerpt

The number of community bank with websites hasn't changed much in a year. More than three quarters of the respondents to our latest survey had one, while 21% still make do without. But as the data in this report demonstrate the banks that do have sites are doing more with them, and beginning to make the kind of sourcing, pricing, and marketing decisions that are bringing some measurable results.

One of the most dramatic findings (p. 32) is that the number of banks creating web services specifically targeting small business customers has doubled in a year.

This year we selected executives at three ahead-of-the-web-curve community banks to provide some perspective on the data in WebCensus 2003. This article is the second part of the ABA Community Bankers Council/ABA Banking Journal Community Bank Competitiveness Survey report. (The first section, which ran in the February issue, can be seen on our web-site, www.ababj.com)

The first thing we asked these bankers about was Exhibit 1, above. As the series of pie and line charts shows, after phenomenal growth among community banks, adoption of websites seems to have leveled off, with a significant minority, 2 1.4%, neither having a site nor having plans for one.

Barbara Brock, vice-president and information technology manager for $63 million-assets Alaska First Community Bank & Trust, Anchorage, expressed some surprise, as every bank in her bank's markets has a web presence.

Similarly, Ken Heiser, president and CEO of First National Bank of Hudson (Wisc.), shook his head. "Early on, a website was more of a novelty," he said, "but now, you're mostly talking about five-year-old technology." Maybe some of the 21.4%, Heiser speculated, are simply waiting for a good market to sell out and don't care for life to get any more complicated than it has to in the interim.

"There's definitely a category like that out there," Bazile R. Lanneau, Jr., executive vice-president and CFO at Britton & Koontz First National Bank, Natchez, Miss., said of the banks not on the web.

However, the Mississippi banker predicted that, in time, all but a hard-and-fast 10% of community banks will find they must get on the web. He speculated that some may still be waiting for their main technology vendor's offerings to be brought into the web age. In his bank's own markets, Lanneau says, all institutions have gone to the web.

You might think that the holdouts were rural banks, or at least those further from urban centers, but that's not the case. Analysis of responses indicates that location didn't have a strong influence on web participation.

PROVIDERS: How community banks get to the 'Net

Britton & Koontz First National Bank, Bazile Lanneau admits, is in a very small minority in the banking section of cyberspace. The $308 million-assets bank is a web "do-it-yourselfer."

Take Exhibit 2, which shows who hosts community banks' websites. Britton & Koontz is among the 19.4% of the sample that handles things inhouse (the bank is an internet service provider).

While seven out of ten banks use one provider for all aspects of online banking services, some go with multiple providers, either by necessity or by choice. Only a few banks use no outside providers (Exhibit 3).

Evolution has taken place, of course. Alaska First used a local consultancy when its site first started. However, when that firm went out of business, the bank took a hard look at what alternatives were out there and chose S-1 Corp. Ken Heiser's First National started with a marketing consultancy, but later switched to Jack Henry. A separate vendor provides the bank's billpay module.

As Exhibit 4 shows, the means of paying internet banking service providers varies all over the lot.

Alaska First pays a flat monthly fee per registered user, so there is a strong incentive to keep the user list current. …

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