Community bankers do not share John B. McCoy's view of the industry's future.
Mr. McCoy, chairman and chief executive officer of Bank One Corp., said he expects the Internet to attract banking customers who are more concerned with getting a good deal than with personal service.
"Smaller institutions won't be able to compete," he said after a speech in Chicago last week. "I am concerned the community banks are going to go like the local bakeries."
Though community bankers acknowledge that big banks can offer lower rates, they say they are not convinced customers will prefer to apply for loans on-line.
"It's hard to get a relationship through a personal computer," said Stanley N. Pontius, president and chief executive officer of First Financial Bancorp in Hamilton, Ohio. "There's a lot of business that needs to be done face to face."
Mr. Pontius was a Bank One regional president before joining First Financial in 1991.
Mr. McCoy's comments "reflect a different industry than the one I operate in," said Joseph D. Reid, CEO of $1 billion-asset Capitol Bancorp in Lansing, Mich. "The idea that there's no room for the human interface between the product and the customer is wrong."
Camden R. Fine, president of Midwest Independent Bank, a Jefferson City, Mo.-based bankers' bank, said the huge number of banks being formed proves there is room for smaller players.
"There's too much entrepreneurial spirit in this country to say community banks won't be around," he said.
In his speech, Mr. McCoy said community banks cannot win on service alone. He said customers are going to go to Bank One and other large banks with the technology to approve loans "in 50 seconds in 50 states."
Bank One is using the Internet to "put a financial service office in every home or business in the United States or the world," he said.
But J. Daniel Speight, president and chief executive officer of $532 million-asset Flag Financial Corp. in Lagrange, Ga., said the Internet threat is no different from that posed by mass mailing and phone solicitations.
"The good credits can go wherever they want to and borrow from whoever they want right now," he said.
Besides, he said, community banks are just as capable of implementing technology to reach more customers.
"We have our Internet package that will go in every home and office too," Mr. Speight said. "And we are still the people who go to church with the customer and see them at the ball park."
Indeed, with technology becoming so cheap, nimble community banks can offer all of the same services as big banks, said Alex Sheshunoff, president of Alex Sheshunoff Management Services in Austin, Tex. If small banks are quick to offer the same products as large banks, customers will not care about the size of the institution.
"It's not the large that eat the small, it's the fast that eat the slow," he said.
Nicki Brown, president and CEO of $92 million-asset Wilton (Conn.) Bank, acknowledged that Mr. McCoy could be correct, and that eventually most of her customers will move all of their business on the Internet. But it will not happen overnight, she said.
"Perhaps in 50 years it will all be done on the Internet, as they say," she said. "But I remember 30 years ago when people were saying we were going to be a checkless society by now. It doesn't always move the way people think it will."
