Waiting for Nobody

By Melby, Todd | Independent Banker, May 1998 | Go to article overview

Waiting for Nobody


Melby, Todd, Independent Banker


Some community bankers are getting aggressive on PC home banking

Hundreds of miles from home, Paul Kimball stood in a Washington, D.C., shopping mall contemplating a small shopping spree. Then he spotted the public computer terminals in the mall with free Internet access. After a couple clicks to his community bank's home page, Kimball's account balance (and his entire transaction history) appeared.

Cyber savvy? Well, yes. As manager of electronic banking at Tennessee's Bank of Cleveland, the 37-year-old community banker likes this sort of thing. And he's not alone.

Since spending $40,000 on aG based home banking system a ye, ago, Bank of Cleveland (www bankofcleveland.com) :corralled 285 consumers into trying the cuttingedge, yet totally free, service that includes online bill payment capt ities. "We beat everybody to the punch and we got publicity for it, but that's not the reason we did it," Kimball says. "It's a valuable delivery channel."

The Internet is expected to grow even more attractive as a financial services delivery channel for both consumers and bankers. Consumers seek faster, 24-hour service through home banking; bankers hope to cut costs and solidify long-term profitability.

With aggressive marketing, Kimball hopes to sign up 10 percent of his bank's 5,000 demand deposit account customers for the new PCbanking product by year-end. "The whole community seems to be technologically sophisticated," he declares. "Carpenters, farmers, brick masons, business people-it doesn't matter. It crosses all sorts of socioeconomic lines."

Doing the Numbers

But are PC home banking services worth the money? As more financial institutions, including large regional banks, dive into the Internet-crazed fray, many community bankers wonder whether such an investment will pay off. Long-term banker expectations forecast that electronic home banking will reduce operating costs and snare more highly profitable customers.

That's the game plan for Bank of Cleveland, Kimball says. Assets at his bank jumped from $78 million six years ago to about $120 million today. The bank plans on opening a fourth full-service branch this summer.

"As this bank continues to grow, we won't have to add people in proof and bookkeeping," Kimball says. "We can handle more volume without adding staff."

The reason? Despite "anytime, anywhere" access through PC home banking, most Internet users analyze accounts, send payments through cyberspace and flip funds between accounts. They do most of this online work not at 3 a.m., but during normal business hours. And that, of course, translateds into less strain on bank resources, Kimball says.

"That's the goal," chimes in Tom Walsh, an online services manager with Jack Henry & Associates, a software provider to banks. "We want to transfer services from the bank to the customer."

Roving the Planet

PC-based home banking services also should help banks hang on to customers on the move, some community bankers say. In tiny Keokuk, Iowa, one factory production manager recently landed a job in faraway Enid, Okla., but he stuck with his computer-connected community bank, State Central Bank.

"As clients move away, they can stay with us," explains Scott Piper, State Central Bank's executive vice president. "They can do everything they want via the Net, except get cash."

State Central Bank, with $160 million in assets and eight offices in central Iowa, is a recent but enthusiastic convert of Web-based banking (www.statecentralbank.com). "As Wal-Mart improved retail distribution to Main Street, the Internet will be to all retailers," Piper predicts. "The Net is great for price comparisons. People are already beginning to price shop mortgages, automobiles and all sorts of things over the Internet."

State Central Bank began offering a PC home banking product in November 1997. Currently, about 100 customers have signed up for it. …

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