Keeping Pace with the Present
There was a time when a customer would walk into his bank to make a payment on an account or loan, and wait while the teller went back to get the ledger card, then physically recorded the payment and made out a receipt. No one has time for this anymore. In today’s world, banking needs to be as instantaneous and real-time as the rest of the world, and banks – from the largest institutions to the smallest community banks – are embracing the emerging technology to give themselves and their clients a leg up.
Both community banks and bigger banks are moving to the Internet in droves. Online capability is a necessity to households and business clients alike. Most community banks either have online capability or are in the process of putting it together. They’re offering customers the ability to do cash management online, pull up balances, transfer money between accounts, originate wire transfers and pay bills from the comfort of their own home or office. They can generate automated clearing house (ACH) origination and stop payments, as well as payroll and taxes.
Wells Fargo is offering a suite of online services that give customers the ability to bank without leaving the office. Their Commercial Electronic Office allows customers to conduct transactions, access information, and receive service online for their credit, cash management, electronic payments, and trust and investment needs, all with a system that utilizes the latest authentication and encryption techniques. And, whereas in the past customers had to load bank software into their PCs or networks, today’s system can deliver all the services right to the customer’s desktop, according to Danny Peltz, senior vice president at Wells Fargo.
There is a perception that small and medium-sized banks can’t offer the same services as the bigger banks when it comes to online banking and banking-related technology. Not so, say the community banks. Not only can they provide the same services, sometimes they can provide them sooner. Third-party providers are one way community banks keep up with the big boys, according to Larry Charleton, CFO/COO with Business Bank of Nevada. Working with third-party providers allows community banks to keep costs down while still accessing the equipment they need to advance in banking technology. For example, a partnership with Netvee will allow Business Bank of Nevada to create check imaging, a product that allows clients to research their own checks online. Check imaging digitally captures the check, front and back, and stores the image so the client can pull up the check and see an image of it, complete with the bank’s routing numbers and all pertinent information.
In many cases, the very size of the smaller banks allows them to implement new technology before the larger banks can get it up and running. In the case of check imaging, Charleton notes that while Bank of America could get four branches set up fairly quickly, the banking giant would not want to get four branches up ahead of the rest. It would wait until it has the capability of introducing the service on a much larger regional scale, according to Charleton, whereas Business Bank of Nevada only has a total of four branches. And since Business Bank is outsourcing the project to a third-party processor, it avoids the cost of new equipment, while a bigger bank would have to buy or lease the equipment to provide for all its branches.
Technology is creating the need for instantaneous information in banking, for flawless delivery, and evolution, according to Peter Crapo, vice president and director of marketing for Silver State Bank. Internet banking products allow customers to access designated information on the Internet. “It’s a highly secure way of obtaining this information, since there are browser capabilities one must have, passwords and identification. And then clients can go in and look at their bank statement, and do banking online without leaving the office.” Combined with the courier service many community banks offer – the ability for businesses to make deposits and order money – it’s possible to bank without leaving the office. “Larger banks are offering this type of service to customers and medium-sized community banks are offering it, so if you don’t have it, it’s going to cost you. If you do have it, it’s a great sales tool,” says Crapo.
The technology is largely customer driven. Community banks are migrating towards online banking services because potential customers who’d like the local, face-to-face attention of a community bank, according to Charleton, are telling those institutions, “‘I’d come bank with you if you had Internet banking capability.’ They want the personalized service we’re known for and can offer, but they also want the big bank products and the big bank tools,” says Charleton. “They need the technology that will save them the most time.”
Time is money. And nobody seems to have enough time anymore. That’s why the flexibility of online banking is in such demand. “Bank from your office, bank from home, bank in your night clothes. Bank however you want to do it,” says Michael Cureton, vice president at Desert Community Bank.
Catching Up with the Future
Jackie DeLaney and Tina Peraza-Nunes with Sun West Bank are currently moving the bank online. While Sun West is entering the testing phase for its online services, the bank is also looking ahead with tentative plans to move into e-commerce in the coming year. Sun West plans to partner with national businesses to allow their customers to shop online as well as allowing some of their business clientele to market their products on the bank’s site. According to DeLaney, the bank is moving cautiously, making certain it understands each step themselves before turning the process over to the customers. Like many other community banks, Sun West expects to outsource the e-commerce component of its online banking, leading to more security in the form of additional layers and added firewalls of protection.
Aggregation is another coming attraction, one Sun West is looking into cautiously. The technology allows customers to use one screen to view all of their accounts, from checking to credit cards to accounts in different institutions. The potential drawback, however, is that to utilize the technology the company allowing the aggregation will have to have the customer’s security codes for those products, something DeLaney finds less than reassuring from a security perspective.
Yet another advance in technology is Zions Bancorporation’s self-entry safe deposit box system. Rather than going into the bank, waiting for the attendant and opening the box with two keys, the customer enters the safe deposit box area with a PIN number and a fingerprint scan, then opens his or her box with a single key. It’s designed for greater customer convenience and greater security, according to Rob Brough, vice president and public relations manager at Zions. Nevada State Bank, a subsidiary of Zions, utilizes the technology in four locations, including supermarket branches of the bank, which offer longer hours for customers to access their safe deposit boxes.
Utilizing digital signature technology – the use of numerical keys, a public key and a private key to create a digital signature – Zions is also moving into providing safe and secure online document storage for its customers. Teaming up with NetDocuments, Zions is providing the ability for companies to store documents online and make them accessible to other parties of their choosing via the Internet, meaning the days of waiting for the morning delivery from FedEx could soon be over. Using the Internet as a virtual safe deposit box, customers will be able to network around the world with the ability to digitally sign and virtually store documents. According to Dan Buchanan, executive vice president of Zions, “The value for customers is convenience. They never have to go in and visit a brick-and-mortar branch or wait for the mail. They can get things done, can move very, very quickly and easily to enter into agreements, access agreements on a 24-hour, seven-day basis without going to a bank.”
Wells Fargo is looking forward to hosting an online marketplace allowing customers to purchase and direct goods, and will have the ability to handle business-to-business invoicing online, as well as providing access to credit and loan information for commercial and corporate borrowers.
In The End, Some Basics Remain Unchanged
The new technology of banking is all about flexibility, all about options. All about customers. According to DeLaney, “The programs we’re creating are totally customer driven; we’re setting them up primarily for the benefit of our customers so they have the option of doing their banking via the Internet, and if they want to conduct personalized banking at the bank, they can. We want to offer them all the options and let them choose accordingly. Maybe today they want to come in and sit down and talk about their business needs or personal banking needs, and once they do that, they may want to be able to do these things on the computer and not have to come to the bank. It’s very customer-driven. It’s all about customer service for us.”
The importance of customer service is illustrated by statistics cited in a recent Los Angeles Times article: even though more and more customers are opting to bank without ever leaving their home or entering a branch, ’Net-based e-banks – totally online banks that boast no physical presence – have cornered little more than one-tenth of one percent of the nation’s bank deposits. Maybe it’s the need to have the ability to actually go look at the place a company’s assets are stored. Maybe it’s the desire to not deal with 1-800 banking. Community banks draw customers by being able to offer both online capability and the ability to offer personalized service. “People prefer speaking to the decisionmaker,” according to Greg Nixon, president of Irwin Union. “They don’t like having decisions made outside the community where they’re keeping their deposit dollars. And that’s completely understandable. So once you’ve established that and have the relationship, you are the relationship officer. You can’t expect them to be calling a 1-800 number for answers.”
As Michael Cureton said, you can bank from home or office, at your convenience. It’s all about flexibility. But he adds, “It’s important to remember that, although we encourage our clients to use this service, to [our bank] the most important thing is being able to be contacted by our clients and be there for them on a one-to-one basis. Do not think technology is a substitute for personal one-on-one attention; it’s just a help.”
