A key to Alex Sheshunoff's longstanding popularity with small-town bankers may be the reassuring message he has for them: Worry about the customers you have today, not the ones you may attract tomorrow.

With just such words, Mr. Sheshunoff introduced a two-day Electronic Money and Banking Forum in Dallas last week. The entry fee was $1,600 to learn about smart cards, personal computer banking, and the Internet. About 250 community bankers attended.

The Austin, Tex.-based consultant rarely fails to draw a crowd for his conferences. Most of the bankers in Dallas said they were doing little in the areas covered by the conference and were somewhat befuddled by the explosion of technology options.

"It's a little scary," confessed George Cook, president and chief executive officer of American National Bank and Trust Co., Shawnee, Okla. "We don't have that much money to dedicate to new technology. And how do you decide?"

Presentations from a variety of vendors - including America Online Inc., Microsoft Corp., Netscape Communications Corp., Sun Microsystems Inc., and Verisign Inc. - offered some clues.

The vendors urged the bankers to stake early claims on the Internet by creating sites on the World Wide Web and offering home banking services.

"For community financial institutions, PC technology and the emergence of the Internet really are the great equalizers," said Michael Rawding, manager of financial services at Microsoft.

Because small banks are able to "move more quickly and make faster decisions," Mr. Rawding said, they might actually hold a "competitive edge" on the Internet.

Mr. Sheshunoff offered a similar message, saying technologies that sounded like "hype" last year are now turning into realities.

"This is going to take place much faster than all the market research indicated," Mr. Sheshunoff said.

Introducing his company's newly trademarked catch phrase, Mr. Sheshunoff asked bankers to rank their clientele's "cyberbanking propensity index" on a scale of one to 10. "A one would be Fred Flintstone, while a 10 is Bill Gates," he explained.

But bankers whose customers qualified as Flintstones were told not to worry.

"If you have a dollar to spend on marketing, I'd spend it on the customer you have today," Mr. Sheshunoff said. "The advantage we have here is one of incumbency: We have the customers; they're ours to lose."


The smart card seemed an attractive notion to those at the conference.

"Smart cards are going to dwarf the impact that automated teller machines have had," said Michael G. Love, a consultant who is president of Applied Chip Technologies Inc.

Mr. Love said some merchants are skittish about the technology because they fear paying extra fees. Consumers are wary for different reasons.

"We keep calling it electronic cash, but consumers don't think of it that way," Mr. Love said. "They think of it as a piece of plastic, and they're afraid to use it."

For banks considering smart card trials, Mr. Love recommended installing the technology in-house, which helps to identify kinks and get employees up to speed.

Edgar Brown, senior vice president at First Union National Bank of Charlotte, N.C., told of his bank's experience testing smart cards at Jaguar Stadium in Jacksonville, Fla.

"Customers demonstrated a preference for $50 cards two-to-one over the $20 cards," Mr. Brown said. About 10% of fans bought the cards.

And consumers who used them tended to spend more: The average cash purchase at the stadium was $7.50; the average smart card purchase, $9, Mr. Brown said.


Futuristic technologies were not the sole subject of the Sheshunoff forum. Bankers were also treated to war stories and object lessons from banks that have made more conventional forays.

A few banks reported on their experiments with "super ATMs" installed in an effort to reduce customers' reliance on tellers. The conclusion: Equipment failure is a major headache, and bad customer experiences can be hard to recover from.

"This is a hard project," said James S. Walker, a vice president of PNC Bank Corp., Pittsburgh, which recently installed 115 advanced-function teller machines in Pittsburgh and Philadelphia.

PNC's machines accept checks without envelopes, scan them, and cash them instantly, dispensing both bills and coins.

To encourage customers to try the machines, the bank mailed out checks for $2.31 that were redeemable only at the machines. The bank learned that "check readers do lots of strange things," Mr. Walker said. "They jam checks. Sometimes they don't read all the checks."

Customers sometimes mistakenly use envelopes or insert checks incorrectly. In 5% to 10% of problems, Mr. Walker said, customers put in checks correctly, but the machine still swallows them or otherwise malfunctions.

Customers whose precious paychecks are mishandled by an ATM are "going to tell everybody they know," Mr. Walker said.


Chris Sontag, vice president of Star Banc Corp., Cincinnati, also related a bumpy experience. He gained the crowd's sympathy by describing the house calls he made to customers who couldn't get their home banking programs working properly.

"The understanding of the PC in the average household is actually quite low," Mr. Sontag said.

Star Bank introduced PC banking Nov. 15 and had 3,000 accounts within three months. To prepare for the launching, the bank encouraged all employees to use the system at no fee.

But making the move to round-the-clock banking was fraught with problems, Mr. Sontag said, and care had to be taken to make sure support systems ran seamlessly. After all, what if a customer called in at 3 a.m. and got an error message?

"If the system is down at any point, the customers will find out," Mr. Sontag said ruefully. "They'll know, and they'll want to know why you sold them a piece of junk."

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