Community banks will steadily lose customers unless they use the Internet to offer an array of financial products, according to industry experts.

"We have to deliver people and technology," said David E. Hayes, president of Security Bank, Dyersburg, Tenn. "One by itself will not be enough for the next century."

Speaking at the Independent Bankers Association of America convention here this week, Mr. Hayes said community banks should develop Web sites that let customers transfer funds, trade securities, and buy insurance.

"I want to be a portal to my customers," he said. "All that matters to me and my customer is that they can point and click to get information or do business."

Web banking lets community banks keep customers who move out of town, he said. "They could leave and live in San Francisco, and they could still bank with me in Dyersburg, Tenn.," he said.

Community banks should form partnerships with brokerage houses to offer securities trading so customers will not be tempted to jump to a bigger bank, he said. For instance, Security Bank teamed up with U.S. Clearing Corp. in New York. "There are day traders in Dyersburg, Tenn., and I love them because every time they make a trade I get 25% of the $14.95 commission," Mr. Hayes said.

Jennifer Elvin, assistant vice president at U.S. Clearing, said her brokerage house has partnerships with 150 banks. The banks' customers can trade securities on the Web and by phone. Funds remain in the customer's checking or savings account until the trade is cleared, she said.

AIM Management of Houston also partners with banks, giving customers 24- hour-a-day access to their accounts via the Internet. "You can do this at midnight," said AIM's Gina Reipel. "You don't have to worry about typical customer service hours."

Linking up with an investment house with Web access makes it easier for banks to monitor the performance of their customers' investments, said Eric Levenson, regional wholesaler at Alliance Capital.

Bankers at a workshop were convinced. W. Thomas Fowler Jr., president of State Bank of Southwest Missouri, said he has decided to develop a full- service Web site for his Springfield, Mo., institution.

"We are trending to more and more people using computers to do their banking business," Mr. Fowler said. "As this continues, it is important for all banks to have the ability to do this."

E. Warner Veillon, president of Tri-Parish Bank, Eunice, La., agreed. "This is the wave of the future," he said. "Those of us, like me, who are behind the curve need to catch up. This is the only way we can level the playing field with the largest banks."

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