When he was head of First USA, Richard W. Vague used to tell a story on the lecture circuit about the time one of his managers suggested a partnership with America Online, and he approved it despite his misgivings — it was the mid-1990s, and he did not buy into the whole Internet thing.

The deal turned out to be a big success for First USA, and Mr. Vague became a popular conference speaker, evangelizing the Internet to the still-skeptical.

Today, as chairman and chief executive officer of Juniper Financial, an Internet-only bank that focuses on credit cards, Mr. Vague’s sermon has become more like a pep talk, which he gave at last week’s eCard 2001 conference in San Francisco and again Monday at the Best Practices in Retail Financial Services Symposium in Palm Desert, Calif. Both events were sponsored by Thomson Financial Media, parent of American Banker.

Despite the collapse of so many dot-coms and a cooler attitude toward technology overall, he said, customers are still eager to apply for credit cards and manage their finances on the Internet, and more eager than ever to connect through wireless devices.

It is not surprising that an executive who has staked his business on the Internet would rise to defend it, but it is noteworthy that someone with such a traditional background should come to embrace the Web so wholeheartedly. Mr. Vague founded First USA as a conventional credit card company, then began relying heavily on online marketing after his deputies persuaded him that Internet partnerships were the way to go.

After Bank One Corp. bought his company and he became an executive there, he helped found Wingspan Bank, the Web-only arm of Bank One. When he left Bank One, he and a longtime associate, James Stewart, decided to use the Internet-only concept in a start-up venture, Juniper Bank of Wilmington, Del.

At eCard, Mr. Vague described some of the benefits Jupiter has derived from being Web-only. “We have no costs associated with paper and postage, so we’re left with only digital costs,” he said. “Those costs continue to plummet, and there’s the belief that they will go down forever.”

Mr. Vague tried to be reassuring about recent dot-com woes. “The Nasdaq has crashed now, and there is a lot of moaning and licking of wounds,” he said. “Nonetheless, the growth and use of the Internet has proceeded at an extraordinary pace.”

Even so, Mr. Vague warned, not all the uses being hyped for the Internet are ready for prime time. One of these, he said, is personalization, such as tailoring ads to Web sites that browsers have viewed or merchandise they have bought. “Personalization today means that if you bought a fishing rod and reel, you’ll be getting fishing rod and reel ads for the rest of your life,” he said. “That’s primitive.”

Mr. Vague said that in their attempts to generate Web site traffic, companies may be misjudging how people like to use the Internet. Financial services outfits, he said, should let customers get their business done quickly, and not expect them to linger for the sheer pleasure of it.

“Companies brag about how many minutes people spend on their Web sites,” he said. “We always thought, ‘Lord, what is wrong with their site?’ ” Juniper’s Web site, he said, takes into account that “most people don’t like to do banking.”

Also at eCard, John Hashman, the president and chief executive officer of NextCard Inc. in San Francisco, discussed data security — and argued it is not as serious a problem as the industry has been making it out to be. Consumers are rarely liable, he said, and companies only confuse them when they boast about advanced encryption schemes, disposable credit card numbers, and similar measures.

“Customers don’t want to hear about firewalls and digital certificates,” Mr. Hashman said. “All they want to know is if they are protected.”

Sukhinder Singh, co-founder and vice president of Yodlee Inc., depicted a Web future of increasing site traffic, proliferating accounts, and pervasive wireless access. Naturally, such an outcome would benefit her Redwood Shores, Calif.-based company, the leading vendor of online account aggregation services.

Ms. Singh said that when Yodlee was founded in 1999, “We were just looking for the next big idea on the Internet. We didn’t really think of ourselves as an e-finance company.” At the moment, she said, the aggregation-user base is “several hundred thousand strong.”

Ms. Singh cited facts and figures in support of a trend that Mr. Vague had mentioned earlier: the rise of wireless. She said that 21% of Yodlee’s users log in to their accounts through a mobile device, and that those people view an average of 10.5 accounts online, versus six for desktop users.

Mr. Vague, in his speech, went even further, predicting that the popularity of wireless devices for getting financial information and for making payments and transactions would soon surpass that of personal computers. “There is more to see in wireless,” he said.

Mr. Vague pointed to international markets in which cellular phones are now everyday appliances. “You see wireless devices in places where PCs were never really used,” he said. “It’s as if they bypassed PCs.”

At the Best Practices in Retail Financial Services conference, Mr. Vague predicted that technology will bring changes in financial services that are “radical, irreversible, and more significant than people realize.”

“Consumers aren’t interested in having their lives changed this rapidly,” he said. “This will have to come to them useful increment by useful increment. The consumer’s desired rate of change is perhaps the most important factor in all of this.”

As the digital revolution moves forward, Mr. Vague said, some financial institutions will become intermediaries, offering products from companies that have greater expertise in a particular area — as Juniper does. “We think all financial institutions will migrate to one or another model, given enough time,” he said.

Most commercial banks are “relatively schizophrenic,” Mr. Vague said, in that they are trying to serve too many markets simultaneously. “We believe the narrower anyone’s focus is, the more likely they will be to succeed. You see a pattern of specialists winning at the expense of generalists.”

Mike Curtis, vice president of e-commerce development at Bank of Hawaii, said he agreed that financial institutions will seek to specialize, noting that his bank recently sold its credit card portfolio to American Express Co. so it could focus more on its trust and investment management business.

“I think financial institutions are focused more and more on going back to their core competencies. Every institution has to make a decision about where to play in the value chain,” he said.

Mr. Curtis suggested that having greater control over their finances will be as important to customers as convenience. “There are companies out there that have demonstrated that if you give consumers control and flexibility, they love it,” he said. “They will use it and they will stick with you.”

Bruce Zimmerman, senior vice president of national consumer service for J.P. Morgan Chase & Co., said financial institutions can act as both manufacturers and distributors of products. “Business cycles naturally go through phases of creating new approaches, developing those approaches, and having those approaches mature. It’s an ongoing reinvigoration of your business,” he said. “Generalists become specialists, specialists become generalists. The world evolves.”

He said he agreed with Mr. Vague that technology is ahead of consumers and for that reason financial institutions must keep a rein on investments. “There will be a time when people will feel comfortable making deposits other than in person, but we’re not there yet,” he said.

Joseph C. Guyaux, chief executive officer of regional community banking for PNC Bank, did not dispute Mr. Vague’s predictions, but took a more cautious stance. He said that only about 40% of PNC’s customers use direct deposit, and that even though the company encourages its employees to participate in payroll deposit programs, about 10% to 20% insist on having a paycheck.

“I can see a time when the Internet might be the predominant distribution channel,” he said. “I don’t think that’s crazy. I also don’t think it’s certain. We’re not planning on shutting down our 716 branches, our 3,000 ATMs or our call center any time in the next few years.”

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