At a recent presentation to the Bankers' Roundtable, Scott Cook, chairman of Intuit, pointed out that customers and banks both seek closer and deeper relationships.

But in using technology as a means to facilitate relationships, the challenge community banks have is holding onto their traditional personal- touch competitive advantage. It's a challenge Mr. Cook and others have not taken sufficiently into account, I believe.

Today there is a separation between the customer and their financial institutions, and the connections are either costly or impersonal.

Mr. Cook believes that electronic commerce will enable companies to reach, sell, and serve customers in their homes or offices whenever they want, offering a new channel for communication between the customer and their financial institution and for delivery of financial services. The customer's benefit is convenience; the bank's benefits are cementing and capturing the relationships and lower costs.

Mr. Cook believes in giving the customers what they want, when they want it, where they want it, and with a low cost per sale, and it is in this vein that proponents of electronic banking make their strongest case. "Go where the customers are," says Mr. Cook. "Customers want to use the banks they know and trust, but they also want to use the PC systems they know and have invested in. Why not offer them a way to link both?"

Mr. Cook and the many proponents of alternative delivery systems are right. Successful banks in the future will have a variety of "nodes" through which their customers can access them, ranging from physical distribution to mail catalogues (a la Bay Banks, the L.L. Bean of banking), to PC banking. What Cook and others do not address, however, is the challenge that this poses to a relationship-oriented institution.

Further, his list of reasons for high-tech access omits one important component: the trust and flexibility that emanate from the personal touch and the physical distribution structure.

As 100%-remote delivery retainers, ranging from Williams-Sonoma and The Sharper Image to Schwab and Fidelity Investments found out, remote delivery is not enough. The physical distribution through branches is an important ingredient in the buying decision of many customers.

While customers increasingly prefer doing business on their terms, and on their time, they also appear to have the need for a physical distribution nearby, as the remote deliverers found.

Even if I assume that we all agree that the future holds a portfolio of distribution channels, the question still remains: How would users in Intuit - and other software and remote delivery channels like it - find differentiation through the banking system?

Today the differentiation is in the form of the atmosphere at the branch, the quality of the people there, the personal touch, flexibility, turnaround time, knowing the customer, and many other tangible and intangible components.

I believe that the financial service's future described by Mr. Cook, while valid, is incomplete. That "relationship component" which has now become the most recent industry fad in retail services delivery, is missing.

Banks that embark upon diversification of their delivery channels and customer access nodes must prepare in advance the relationship strategy as it applies to each one of these delivery channels.

Giving the customers what they want, when they want it, where they want it, and with a low cost per sale, will create zero differentiation across institutions.

Commoditizing yourself out of existence is one approach. Mass- customizing your services to specific target segments, or finding a different way to create value for your customers, like USAA did, are two possible answers to the challenge that lies ahead.

Before you jump on the bandwagon of micro-marketing to every individual customer, figure out how you are going to differentiate that delivery from other vendors and how your package will look different over the wire than others.

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