Dale Smith

Ampersand product manager Electronic Data System Corp. Plano, Tex

Home banking has been struggling for years to gain a foothold, and I believe the time has come for it to begin to take that foothold.

As it begins to penetrate the market, I think that banks will polarize into two camps: those that are very successful at delivering home banking and those that are less successful.

What will follow is that the services that are delivered via home banking will tend to become commoditized. In order to differentiate themselves, banks will have to do something extra.

I believe that something extra will be value-added customer service. Banks that decide to provide that value-add will continue to provide it through the local service delivery point, which is the branch.

Some banks may decide to completely boot the branch and go electronic, but they do face the problem of being commoditized. The ones that go this route obviously will not spend a lot of money on branches.

The ones that decide to continue to deliver through the branch will need to upgrade the branch and make the technology there at least as slick as the technology being delivered across the network and into the home.

In my opinion, that means considerable spending in most of the banks that want the branch to continue to play a significant role.


Thomas Lindsay

Director of financial deliveryAT&T Global Information Solutions

Dayton, Ohio

The financial institutions we are working with tell us there is a fundamental change occurring in their delivery systems - some caused by customer demands and some caused by competitors.

The branch is still part of that. At your average bank, customers are still cashing checks, and banks will keep investing in the offices, since they are serving a wide range of clients.

The bottom line is that they are trying to incorporate customer demand for an expanded delivery environment into their branch offerings.

Banks need to understand how to prioritize where they should be spending investment dollars today.

Financial institutions are concerned about making the right decision with limited funds to invest. Their goal is a delivery system that meets all customer and strategic requirements and meets the model of the products that we want to deliver.

Trouble is, nobody knows what that model will look like in three years. However, they do know that home banking will play a big role in the future, as will branch automation and automated teller machines.

But branch-based services may migrate to different platforms, such as telephone banking and two-way video communications.

Banks realize there are several pieces to the puzzle, and the goal is to put these pieces together in the right way.

Most financial institutions are getting their feet wet on the Internet and getting ready for home banking. These companies need to know that these technologies are delivery channels that their customers are going to use in addition to the branch.

It may not be the dominant channel in the future. The infrastructure of the branch will need to support the other delivery mechanisms.


Steve Hirsch

Vice president Chase Manhattan Corp.

New York

Chase's rapid expansion of technology services began in the branches, where, in an effort to improve customer service, we began experimenting with self-service deposit boxes and interim statement printers about eight years ago.

Though the growth of home banking services seems to have overshadowed the development of branch enhancements, the exploration of new service delivery platforms for both areas continues.

Investing in both areas is an important part of our growth strategy because we recognize that customer preference spans many delivery channels.

For customers who prefer remote 24-hour access to banking services, we are providing a broad range of options. We have teamed with Microsoft and Intuit to offer PC-based banking services.

We are also planning to put up a Web server on the Internet and to provide access through a full complement of commercial on-line services.

We have also developed ChaseDirect, a service that combines highly trained personnel and sophisticated technology to make full-service banking available 24 hours a day, seven days a week, via PC, fax, phone, and mail.

Concurrently, we are expanding our "branch of the future" network by equipping branches with such technology as automated teller machines with new features, interactive video kiosks to link customers with product specialists, and sales terminals to provide on-line access to real time product information.

Though new technologies that improve home and branch banking continue to emerge, we will continue to maintain a balance, investing in alternative service delivery vehicles to attract new customers and developing new ways to increase the efficiency of our existing distribution system.


James Moore

PresidentMentis Corp.

Raleigh, N.C.

The bottom line is that funds will be refocused on channel integration and data warehouse development.

The PC hardware architecture has evolved in the larger banks, but half those PCs have PC-based banking application software running on them which enables them to function.

The conventional wisdom was that after the hardware platform was settled the applications would be installed and the data would be drawn from the host so the banker can get the customer's name at the point of sale, to cross-sell and manage that customer effectively.

The conversion or migration of the controller-based branch architecture to the client/server involved much more than bankers initially anticipated and required a reengineering of the system.

Alternative delivery channels became popular. Bankers began to recognize that consumers preferred conducting transactions through self-service - automated delivery channels that facilitated convenience and universal access.

We see now telephone services and call centers have evolved in the last 36 months and now handle 24% of the transaction volume, according to the Bank Administration Institute.

Branches have thus become selling and service centers rather than transaction centers.


David Kerstein

Executive vice presidentOld Kent Financial Corp.

Grand Rapids, Mich.

A good portion of the spending on internal platform is cyclical. The industry has already automated a lot of the platform. Most banks have the technology already, and this is one reason why the level of spending on branch automation has decreased.

But on the other hand, there is the replacement of aged systems that has to occur at some point. Several banks, like ourselves, are quite flexible, but replacement systems will be the driver for many banks. It is inevitable that this will occur for internal banking systems. The economies of scale - and of skill - are two critical factors every bank must analyze. With the recent bank mergers, banks are not looking to get a common platform system.

We want to make sure the segmentation schemes and common systems are employed. In some cases, we have already done so.

There is no doubt that home banking will become a more popular form of banking and will become much more functional, though I would not want to predict that it will be the predominant form of banking.

The experts said that in the last five years the banking technology has made transactions easier and more efficient and, in the next few years, it will be even easier. It just needs to evolve to that next level.

There are some who also said that there will come a time when no one will carry cash and branches will disappear; enter the paperless society.

Compiled by Matt Barthel and Dominick Fontana

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