Bisys Group Inc., a data processing vendor used by 300 banks and thrifts, has developed a service called FirstLinq that would let its bank clients offer Internet access services to their customers.
Little Falls, N.J.-based Bisys has a deal with AT&T to offer these services on a private-label basis, which would let banks become Internet service providers that compete with the likes of America Online and Prodigy. AT&T is to fulfill the online support and customer service duties. Five community banks have signed up for FirstLinq.
"Banks can position themselves as the entry point to the Internet," said Bill Neville, president of Bisys Information Services.
Though banks are trying to become Internet portals to offer their products and services, FirstLinq would let its users become primary access points to the Internet. FirstLinq users would collect monthly Internet access charges at a lower price than AOL and other national service providers charge, he said. Banks could charge as little as $10 a month for Internet access and online banking.
"Banks today have a lot more to offer than just banking transactions," Mr. Neville said. "The bank is in fact the portal. It is the one time they have to gain the eyes of customers before they head out to other Web sites."
About 100 of Bisys' bank and thrift customers offer banking services through the Internet - not the same thing as hosting Internet services through the FirstLinq product.
Mr. Neville said the idea of developing FirstLinq sprang from complaints by bankers that Internet banking was unprofitable. These bankers felt they had to offer the service, however, to prevent the loss of customers who want to bank online.
Online bill payment services providers, core data processors, and other expenses approach $20 per customer per month, which exceeds the profit the bank could realize, Mr. Neville said.
"One way we thought of trying to mitigate this cost for the community bank was to develop and deliver this" Internet service provider package, he said. "The bank can pocket the difference between what it pays and what the consumer pays."
Carla Cooper, an equity analyst at Robert W. Baird & Co. in Milwaukee, said banks that become Internet service providers can use this "home page advantage" to create ancillary services, such as news and other information specific to their communities, thus increasing their sites' "stickiness."
"If banks do it soon, they can capitalize," she said. Using the Bisys service, banks "have a nice shot at making themselves the primary portal," she said, adding that companies in a range of industries - from insurance companies to radio stations - are increasingly considering becoming Internet service providers.
"Clearly there will be a war waged there," she said.
To help its banking customers develop their Internet-related marketing programs, Bisys has formed a marketing alliance with Murphy & Co., a St. Louis consultant specializing in online banking, bill presentment, and electronic commerce. Its president, Paul Murphy, wrote "Banking Online for Dummies."
Under the alliance, Bisys and Murphy & Co. began a series of seminars this month in several Northeast markets.
