Banks are beginning to catch up to the securities industry in offering trading services over the Internet.

Wachovia Corp. and Security First Network Bank are getting closer to putting securities trading features on their home banking sites, as are a group of Texas banks using a system called MoneyXpress.

Wachovia's brokerage product, scheduled for release June 16, will be part of its PC Access service, an Internet-based product that will include banking services and integration with Intuit's Quicken and Microsoft's Money personal finance software.

The bank is using Rockville, Md.-based Netvest for the investment side.

Security First's service, said a spokeswoman, will be in a beta test during the third and fourth quarters, with full-scale release perhaps by yearend.

Meanwhile, vendors like Quick & Reilly subsidiary U.S. Clearing Corp., Cambridge, Mass.-based FarSight Financial Services, and New York-based Transaction Information Systems are introducing turnkey products for banks and brokers alike.

Jeff Maier, vice president of marketing for U.S. Clearing, said five banks have expressed interest in licensing the QuickWay Net system for Internet trading, but like other vendors he did not name names. Four brokerages are slated to offer the product this month.

The move by banks to offer trading services is seen by some as largely a defensive maneuver to keep up with fast-moving nonbank competitors.

"We've already seen them (nonbanks) take a lot of customers away with asset management accounts, and by giving those accounts on-line banking capability you'll only increase that trend," said David E. Weisman, director of money and technology strategies at Forrester Research in Cambridge, Mass.

Mr. Weisman warned that banks need to move quickly to avoid further losses in the battle for consumer accounts as it moves to the Internet.

Since February, Lindner Funds, a St. Louis-based mutual fund complex, has offered Internet access to everything from stock trades and bill payment to debit cards and checks.

Some experts say that if banks want to attract customers from this growing market-a recent report by Jupiter Communications predicted 4.5 million home banking users by the end of 1997-they must offer securities trading through their Web sites in addition to traditional bank products like credit cards and checking accounts.

"Most customers don't want multiple relationships. They like to have the ability to move funds in and out of things like mutual funds and CDs," said Christopher L. Williston, president of the Independent Bankers Association of Texas.

He warned that banks need to be one-stop sources, as some of their toughest competitors already are.

"If Merrill Lynch and Charles Schwab can make all of this available to the customer today, how can I keep a customer from walking away from my bank when I don't have the investment side like these guys do?" he said.

Member banks of Mr. Williston's association intend to address this problem with MoneyXpress, an Internet banking program jointly developed by a consortium of eight technology companies, including heavyweights Microsoft Corp. and Visa Interactive. The program is to offer securities trading features provided by St. Cloud, Minn.-based Primevest Financial Services some time in the third quarter.

Among current entrants, Citibank offers on-line brokerage through its dial-up home banking service, and Wells Fargo has a trading interface with the Prodigy network.

No bank has yet released an Internet-based program that seamlessly integrates bank services and securities.

Robert S. Kniejski, division executive for personal financial services at Wachovia, said banks have been deterred by start-up costs and maintenance requirements.

Banks planning a securities service "need to be in some way in the investment or brokerage business to make it viable. Most large institutions have the capability to do this, but as you go down in size it becomes less feasible."

Third-party vendors, however, are rushing to make it feasible for those too small or too wary of the costs to develop their own systems.

These vendors are using the old outsourcing argument. "If banks try to do this themselves, they'll be spending hundreds of thousands of dollars, possibly even over a million," said Mr. Maier. A customized package can be $10,000 to $20,000, he said.

The vendors see securities trading as a customer-retention magnet that statements and bill payments are not.

"Banks, I think, average two-and-a-half products per customer," said Transaction Information Systems president Robert Gold. "If they want to drive that to four products per customer by cross-selling, there's no way to do that if they are losing that interface" to brokers or mutual fund companies, he said.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.