Not too long ago, Web-based banking was considered a glimpse into the future. But, with the blink-and-you'll-miss-it pace of IT development slicing product shelf lives into fractions of what they once were, it had to be only a matter of

time before Internet banking transactions became old hat. And according to a Meridien Research study, more than half of all banks will offer basic transactions via the Web by 1999. So what was once a competitive edge is fast becoming a commodity. The big question: What's the next phase of Internet banking? Active selling.

In this phase, banks will have to differentiate their Web-based offerings by using the information they collect to anticipate customer need and make product suggestions when appropriate, either via e-mail or in real-time through personalized Web pages. The goal is to offer a diversified and customized line of products conveniently and cost effectively. This is what Bank of Montreal is aiming for with mbanx, its personalized direct banking division that offers basic banking transactions, including bill payment and a full range of on-line trading capabilities, says svp Charlie Piermarini. "The offering of products through the Web is already getting crowded in terms of participants," he says. "The biggest challenge is creating a unique value proposition that distinguishes you from the competition."

Successful active selling via the Web starts with a robust customer database filled with information on the habits, behavior, and likely needs of both retail and corporate customers. It also requires that bank business units be networked, pooling data so that each unit has access to complete customer profiles. "If (a bank) can't link data together, it makes it very difficult for (bankers) to make sensible suggestions," says Meridien research director Octavio Marenzi. This project, he adds, will cost anywhere from a few hundred thousand dollars to well into the millions, depending on the level of database sophistication and technology a bank has.

But banks actually have the upper hand on the Web-over both brokerage and insurance companies, say sources. While the Web is excellent for investment product selection and transactions, brokerages simply don't have enough product offerings for cross-selling analysis to make sense. And insurance companies are just not that well equipped for the Web, traditionally lagging in technology adoption.


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