Bankers Facing Real Changes In Virtual World
Ray Van Eng (06/05/96)
According to a recent study from Ernst & Young, a whopping 45% of all
retail banking transactions took place without human intervention. Home
banking, telebanking and ATM have been the top choices among consumers
who choose to bank electronically.
Furthermore, the study suggests that in less than two years, such banking activities could increase to 60%. In light of this, it is not surprising to find that 93% of the banks surveyed have indicated that they would offer online banking services by 1998.
When it comes to interactive remote banking technologies, there are a number of delivery channels that hold a great deal of promises in early tests. One of them, a new machine from Affinity Technology Group, Inc. known as the Automated Loan Machine (ALM) has generated much interest among users and bankers.
The ALM allows a qualified applicant to obtain a loan in less than ten minutes without the presence of a bank employee. With proper promotion, the ALM is said to be able to pull in a very significant number of new customers for the bankers. In some cases, the new customer rates are as high as 79-88%.
Tom McCormick, Executive VP of First Citizens Bank, notes that "the ALM, far from a passive addition to our capabilities, can actually boost our service into entirely new areas...as we saw with local merchants for whom we designed an outreach program. They like the machine as a new, highly convenient way to finance their businesses."
Location is also important as to where the remote banking terminals are placed. This factor scored high in consumer's perception of convenience. Many rated the availability of in-store banking at supermarkets as more important than other conventional grocery shop departments such as deli, restaurant, pharmacy or even bakery services.
Retail banking seems to be going through a period of on-demand services catering to a buyer's market. Services are provided at places where customers want to bank. This market trend has generated a number of new and unusal distribution channels that may become a wide-spread reality in the near future.
Home banking is one market that will likely experience major phases of expansion over the next two years because of consumer pull and technology push. Since Microsoft abandoned plans to acquire Intuit earlier this year for fear of anti-trust complaints from the US Department of Justice, the two rival personal financial software giants have been very aggressive in cultivating support among bankers and payment processing companies in pushing home banking systems designed to use the Internet as a delivery platform. Like it or not, both of these players would probably end up having the lion share of the market to themselves one way or the other.
Bank of America is poised to introduce the long awaited HomeBanking service to the consumer and small business markets. It will allow customers to access their accounts, pay bills, transfer funds via the Internet, America Online or Bank of America's Pay by Phone service. E-mail or fax messages can also be sent to the HomeBanking customer service department which is staffed 24 hours a day, seven days a week.
BofA's own Managing Your Money software is fully compatible with Microsoft's Money or Intuit's Quicken. Information can be freely transferred between these software programs, thereby enabling BofA customers the ability to integrate the HomeBanking service with their personal financial management.
Before home banking has even establish itself, other companies are already working on devices that allow remote banking for those who are on the road. Sony and other partners such as Visa Interactive, General Magic and a number of banks in Utah and Mississippi are conducting pilot programs using Sony's portable paperback-size PIC-2000 Magic Link Communicator to facilitate electronic bill payment, fund transfers and account information access.
The objective of their tests is to pursue a small but unique niche market. With the Sony device, you can do bank transactions anywhere even in the middle of the desert with just a regular telephone land line or a cellular phone access. Motorola is reported to be adding the wireless communication option later this year.
Bankers' increased technology spending last year which amount to $18.7 billion or a 14.7% increase over 1994 definitely reflects changing times and a market shift towards virtual banking and interactive delivery channels which will only accelerate as we rush towards the year 2000.
