Banks need to invest more in the payment-systems aspect of business-to-business electronic commerce, Arthur Andersen says.

Most financial services executives think electronic commerce has had the most effect on distribution, marketing, competition, and customer relationships, according to an Andersen survey.

Forty-four percent of respondents said it had affected their customer relationship management strategies. Thirty-seven percent said it had influenced their product distribution models.

But behind-the-scenes applications such as payments, clearing, and procurement have not been affected as much, bankers in the survey said. Andersen flagged the slow progress of Internet payment as a warning signal.

"Payments are the crown jewel of the banking industry, and the longer banks don't develop a solution, the more likely payments are going to be usurped by other companies," said Cary Serif, head of e-business financial services in North America for Arthur Andersen.

According to the study, financial services executives recognize that payments will be an important application as electronic commerce develops. Fifty-eight percent said payments and collections would be the most widely offered service by banks via the Internet in the future.

But only 20% said they are following a business-to-business electronic commerce strategy that includes payments and collections applications. Arthur Andersen suggested that underdevelopment of payment methods is a key reason these executives have been slow to formulate such strategies.

Survey respondents were not in agreement about which payment methods would best support their electronic marketplaces. Eighteen percent said they considered credit and debit cards as the most viable method, 15% bulk payment systems, 14% bilateral netting, and 13% electronic cash.

These findings from a survey of 226 financial services firms show that banks are too dependent on existing revenue streams, Mr. Serif said. They need to be wary of a new breed of financial services and technology companies competing in business-to-business electronic commerce, he said.

Mr. Serif warned that, despite the recent dip in their stocks, technology companies "are going to come back, and financial services companies need to be prepared to make radical changes throughout their organization to compete."

He said they can do that by dedicating an executive to electronic commerce. It is equally important to continually transfer knowledge and understanding to other employees, he said.

No business model has prevailed in b-to-b online commerce, but financial services firms should not use that as an excuse to merely build a "nice revenue-generating Web site," Mr. Serif said. "They need to think about incubators and strategic alliances."

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