Senior vice president
First interstate Bancorp
THE INTERNET IS THE BEST current candidate to be the information superhighway that many people have been talking about. Banks have two potential areas to use the Internet. One is consumer and one is business.
There is stiff a lot that needs to be done on the business side to build a secure enough environment to conduct business. We have yet to evolve to that. Assuming that we do, we can send payments. And then will come the ability to write electronic checks. We are not there yet; we are still in the initial research and development stage, and not even quite up to the development part.
For the consumer, we have things like the bank card transaction. Transactions are already happening in an unstructured way in message format. It is pretty unsecure. It scares the bejeebers out of me. You are giving away the key to the bank card. Banks need to get in there and offer those payment services in a safe way.
Banks can also use the network as a vehicle to deliver traditional services. I don't quite see a printer turns! on top of a television set, sending money like an ATM, but electronic banking services like bill paving are reasonable to expect in a 10-year horizon. It may not be universal by then, but it will be something that is available in the home.
M One Inc.
Right now, everything in electronic banking is at a wait-and-see point. We are all waiting to see what the Microsoft-Quicken merger will mean to electronic banking because Internet will be the vehicle they use to get into the game. We have talked to some vendors that have stopped dead in their tracks with plans until they see what Microsoft will do. This is the company that will really develop the virtual bank. Bankers are excited about the prospects and for good reason.
THE INTERNET HAS TREMENDOUS potential, especially when looked at in context with other on-line services. There are applications for both consumer and corporate areas. It also has some direct marketing and information value.
The role banks play is multiple. We can reach out directly to consumers offering any number of financial services, from payments to credits. Or we can work with corporations that are conducting commerce over the Internet.
We could have video conferences. There is the vision of the virtual bank, with an ATM-like device at home linked to a financial institution. Consumers could dial up and reach a financial adviser or they could download cash and write checks. The people who want to do it are there and the technology is there. It is a matter of cost performance.
As security begins to be addressed and the right measures are put in place, there is potential for a number of different transactions to be conducted. It is all a matter of timing. It could take off dramatically, or it could go a lot slower than we thought.
THERE IS A TREMENDOUS opportunity for home shopping, and from that would flow payment transactions,
Cardholders and merchants starting to use the Internet goods. Except for a limited number of cases, there is no security for this. Obviously, since it is not a secure network, those payment instructions could be modified or compromised and used fraudulently. There are various areas along the line - whether by the merchant, the person buying the goods, or an outsider - [where] fraud could be committed. The level of risk is difficult to determine. A more secure environment is needed from the very simple act of encrypting instructions to changing the payment infrastructure to a higher level where cardholders can ask for authentication to see if the merchants offering goods and services are who they say they are.
We're working together with software developers and other cardholder associations to change that.
The Internet Letter
THE INTERNET CAN BE USED as a document delivery service for such areas as mutual fund sales. Banks could do such things as convert paper prospectuses into electronic formats. The user of Internet could access the information, and in the time it takes to hit a few keys, have the information delivered.
The network could also be used to provide various sorts of information, such as rates on mortgages and other loans. This is one way for banks to reach out to consumers and increase market share. These services can be set up with simple units that are really no-brainers to implement.
Banks can also set up E-mail addresses. Consumers could use it to learn about different products and services. It win cut administrative costs, since answering questions about such things as rates on passbook savings accounts, loan rates, or branch hours is time consuming. The bank can set it up so automatic replies to mundane questions are generated. Banks can also send out promotional material to generate revenue.
I don't exactly see banks using the Internet any time soon to conduct real transfers of money, but when one progressive bank with some foresight starts offering services that do not need as high a level of security, others will follow suit.
WILLIAM M. RANDLE
Senior vice president
IF INTERNET ADDRESSES the issue of security, then it will be the bank's job to provide the front end gateway to the mainframe. I don't want Internet connected directly to the bank. This will be the gateway allowing the customer to come in from a variety of channels and a variety of appliances. I don't care if my customer comes in using the Internet or cable, but once when they get in, I want to make sure no hackers can get into the bank's data. The gateway will give the customers access to specific bank products, providing any customer anywhere, anytime with access to their money. It is our job to provide the platform sitting between the customer and the mainframe.