Huntington, AT&T Joining Forces
Huntington Bancshares Inc. has formed an alliance with the American Telephone and Telegraph Co. to market an electronic home banking and information service that they plan to offer to banks next year.
Senior banking officials said Huntington's chairman, Frank Wobst, and AT&T officials plan to announce the partnership at a joint news conference to be held at Huntington's Columbus, Ohio, headquarters and in New York City today.
The service is designed to allow customers to do banking transactions without visiting a branch.
The Columbus, Ohio, bank, with $12.3 billion in assets, will use a specially designed AT&T telephone to deliver some services.
Huntington is investing more than $10 million to form a unit called Huntington Direct, which will develop a 24-hour on-line banking and information services that it will roll out to its customers and offer other institutions by the middle of next year 1992, sources familiar with the service said.
"This is much more powerful than any previous initiative in home banking," said a banker involved with the project, who asked not be identified.
AT&T's contribution is its SmartPhone - an advanced telephone with a small touch-sensitive display - as well as its technical and marketing expertise.
Saving on Bricks and Mortar
Sources say Huntington's plans for the new unit are two-pronged.
First, the bank wants to provide bank and nonbank services to new and existing customers in its seven-state market without having to build more offices. Handling transactions electronically is also cheaper than processing transactions at branches.
Second, Huntington wants to increase fee income by processing Smartphone transactions for other institutions that decide to embrace the device as a vehicle for home banking.
Huntington executives believe that many banks going through mergers that will result in mass branch closings will want to offer customers a service that will let them do banking at home.
Huntington Direct will allow customers to do routine banking tasks, such as checking balances and transferring money between accounts. Consumers can also access information about their credit cards, bank products, and other information services such as airline reservations and home shopping via the SmartPhone.
The touch-sensitive display screen lets customers quickly access services. Customers can also use a special "personal banker" button on the phone, which automatically connects them to a live operator. Some Huntington Direct services can also be accessed using a regular telephone.
Huntington Direct will also perform the back-office processing for banks that want to offer a similar service but do not want to invest in computer systems.
AT&T's network systems division will also work with banks that want to build their own information service program using the SmartPhone, sources close to AT&T said.
Much of the $10 million investment will go toward installing computer systems developed by Bell Laboratories that will make Huntington Direct's back office the go-between for Smartphone transactions involving other banks and service providers, such as travel agents and cataloguers.
Huntington's computers will act as a kind of telephone switching system, routing transactions between consumers and various service providers.
Hanover's Role in Prodigy
Manufacturers Hanover Trust Co. serves a similar role for home banking and consumer bill payment transactions made through Prodigy, an PC-based videotext service developed by International Business Machines Corp. and Sears, Roebuck & Co.
Huntington is also developing some of the software for the system. The new unit, a part of the Huntington National Bank's retail banking division, will be staffed by existing Huntington employees, but sources say the bank will hire additional technical talent. It is not known how many bank employees will be shifted over to the new unit.
In its first year of operation, Huntington estimates that 10,000 customers will sign up for the service and use the Smartphone. The service, which includes installation of the new telephone, will cost $20 to $25 a month, sources say - far higher than PC-based banking services. The bank will also charge a $100 sign-up fee, sources say.