Online Resources and Communications Corp. may be suffering from an identity crisis, but the confusion does not stem from within.
The McLean, Va.-based company is best known as the manufacturer of the ScreenPhone, a relatively low-cost screen-equipped telephone used by NationsBank Corp. and several other institutions to deliver home banking and bill payment services through Online's transaction processing platform.
Now in its sixth year, Online Resources is working hard to shake its image as a mere screen phone provider and be recognized as the financial services gateway it is striving to become.
"Online Resources has been severely mispositioned," said chief executive officer Matthew P. Lawlor in a recent interview. "The idea never was to be just a screen phone provider."
Indeed, since its beginnings, Online Resources has been branching out.
Although it has offered electronic banking through screen phones longer than any other company - three years - its back-end platform also supports automated touch-tone applications, and is expected to handle PC access this year.
The company pledges eventually to support any device consumers may want to use, such as interactive television and personal digital assistants - and it does not intend to stop there.
The company is already in the process of adding a number of electronic financial services that go beyond traditional home banking and bill payment.
It has recently begun providing PC-based brokerage services in conjunction with the Pershing division of Donaldson, Lufkin & Jenrette Securities Corp., for example.
The company also plans to deliver credit applications, such as installment loans, equity financing, credit cards, and mortgage loans. Some of these will be available next year.
And through a presence on the Internet's World Wide Web, the company will begin offering transaction services via the network next year.
Getting up to speed on all of this will require bringing on new corporate partners, said Mr. Lawlor.
With a round of recent financing over - Keefe, Bruyette & Woods Inc. and other institutional investors raised $7 million for Online Resources' business expansion - Mr. Lawlor seems to feel it is finally time take the company to the next level.
Such a move will involve pursuing strategic alliances with product and telecommunications companies, and with content and service providers - some of which may become investors.
The ultimate intention is to position Online Resources as a hub for the national interactive services infrastructure, Mr. Lawlor said.
This infrastructure is evolving on several levels, according to a study released this year by the Bank Administration Institute and Boston Consulting Group Inc.
The report, titled "The Information Superhighway and Retail Banking," concludes that access, distribution, packaging, and content will be key pieces of the financial services pipeline, and that organizations are now beginning to take their places accordingly.
"We see ourselves operating strongly at each level," said Mr. Lawlor.
At the access level are companies that provide interactive devices, such as screen phones and personal financial software. Other vendors operating here include Microsoft Corp., Philips Home Services, U.S. Order Inc., AT&T Corp., and a variety of others.
While matters of access are certainly critical to the development of interactive channels, Mr. Lawlor said that too many banks have become mired in decisions over which device is best for offering services.
Banks lately have been caught up in the hype surrounding the PC as today's hot access device, he said, even though the PC is still largely a niche product.
"Those of us in the business understand that it's going to be many different devices," he said.
Online Resources' largest customer, NationsBank, also recognizes the need to develop several channels.
"Consumers will demand multiple devices to do their banking," said Chuck Hieronymi, NationsBank senior vice president responsible for alternative channel development. Online Resources' device-independent strategy is "right on track," he said.
The $184 billion-asset banking company, based in Charlotte, N.C., has been offering the Online ScreenPhone in the Maryland-Washington, D.C., area since 1992.
The bank intends to target customers with a PC preference with its Managing Your Money personal finance software, developed by Meca Software Inc. NationsBank and BankAmerica Corp. recently acquired the company.
NationsBank will also offer a related touch-tone bill payment service by the end of 1996.
Despite the focus on access, the real battles in the interactive services market will involve distribution, packaging, and content.
"Banks are focusing on the technology, but what are they delivering through those technologies? What services do they have that consumers and businesses want? Are they packaged well? Is there a good combination of technology and human touch? These are the things they should be thinking about," he said.
"If banks want to really penetrate the mass market, they are going to have to find easy ways to get people started," he continued. "This is where we applaud what Citibank is doing, offering bill payment free to customers."
In June, Citibank eliminated fees on the majority of its electronic banking services, including those it delivers through automated teller machines, PCs, and screen phones.
Citi is saying, "'This is a way for us to get to you, and you shouldn't have to pay anything,'" said Mr. Lawlor. "Citi gets benefits, such as cost displacement, and account retention, and consolidation. They've built a business case, and our customers should be able to also. The cost to the banking customer should be little or nothing."
Citi's move was followed by a similar action by Chase Manhattan Corp., which waived most of its home banking and ATM transaction fees for customers with a minimum of $6,000 in their accounts.
Over the next year, Mr. Lawlor predicts that more banks will begin offering home banking and bill payment services free to their top 20% to 25% of customers.
Some banks will also bundle free screen phones with the service packages, he said, adding that those without such policies will find their best customers up for grabs.
NationsBank is not likely in the short term to cast off its screen phone pricing scheme, according to Mr. Hieronymi.
The bank charges $6.95 a month for home banking and bill payment services. It sells Online's ScreenPhone 120 for $79.95, and the enhanced model 220, with telephone company services such as Caller ID and three-way calling, for $119.95.
Mr. Hieronymi said, "While there are opportunities to look at different pricing structures, we're satisfied that the prices charged for service and the phones are aggressive." He added that the bank will continue to try to find "the right combination" of pricing and service.
Other areas of contention within the interactive services landscape deal with distribution and content, linking customers to a variety of financial applications.
Mr. Lawlor calls providers of these links "consumer gateways," among them, Online Resources, Visa Interactive, MasterCard, on-line services providers, and cable and telephone companies. All are engaged in managing communications networks and routing customers.
Today, these providers operate as specialized gateways, Mr. Lawlor explained. America Online, for example, provides PC-only information services and limited financial services. But Mr. Lawlor sees this changing with the emergence of general-purpose gateways from which customers will be able to access both banking and nonbanking services.
He says he believes the telephone companies will begin to support general-purpose gateways in the next five years. And since they do not have the skills to deliver a full range of content, they will work with specialty providers that will deliver specific types of information services, he said.
Online Resources wants to be one of them, acting as a link between consumers, financial institutions, and various financial services.
In order to remain competitive, banks must also become electronic "financial supermarkets," Mr. Lawlor said, either by becoming service integrators themselves, or hooking up with bank-friendly third-party providers.
"If banks don't do something, they're going to find themselves being dictated to by on-line services providers or telephone companies that will dominate the gateway area," he said.
With customers dialing into these networks, Mr. Lawlor said he feels that providers will be able to direct consumers to particular financial institutions, and strongly influence where business for financial services goes.
The same point is made by the BAI report, which notes that on-line service providers and telephone companies, referred to as "navigators," can manage access to content, and control the ease with which customers find particular applications. The report goes on to say that these companies can become content integrators themselves, and directly compete with financial institutions for their customers.
"It's a very real threat," said Mr. Lawlor. "What we've been advocating is that banks get out there right away and get in front of consumers. Customers should be dialing into banks."
As content integrators, banks will do battle on their ability to deliver multiple services, Mr. Lawlor said. They will face competitive threats from such players as credit card and investment companies that, traditionally segregated, will eventually merge by dipping into each other's territories to offer a broader spectrum of services.
"They'll start with whatever their expertise is, but will quickly migrate the user into other services," he said. As a result, "banks can't just be bill payers," but will also have to provide some crossover of services.
Such applications are "one of the critical competitive advantages for banks," according to the BAI report, yet most financial institutions are moving slowly with regard to content development and packaging.
NationsBank, for its part, plans to investigate a range of content providers, including services offered through Online Resources, but has no definitive plans at this time, said Mr. Hieronymi.
Just as financial institutions are attempting to transform themselves in an increasingly wired world, Online Resources endeavors to keep pace with an evolving interactive services market, spurning its obsolete identity as a screen phone provider along the way.
"We're called Online Resources for a reason," said Mr. Lawlor. "We're on-line with a variety of different devices and services, and we're a resource to financial institutions, be they credit card companies, brokerages, banks, etc. Over the next couple of years, we see ourselves spreading our wings."
