Many bankers feel compelled to dabble on the Internet, perhaps through a modest Web site or home banking service. But Robert E. Evans is having none of it. "We're not sure that it's going anywhere," said the vice chairman of Twin City Federal Bank in Minneapolis.

Reading aloud from a newspaper article that said bankers who ignore the Internet are going to be left in the dust, Mr. Evans just laughed. "That's the same sort of hyperbole we were hearing 20 years ago when they were saying the checkless society was just around the corner." At least he has an opinion. While most financial institutions larger than his $7 billion-asset thrift have at least begun to dabble, thousands of bankers, from second-tier regionals down to the small-community level, are just plain confused. How might a bank with limited funds experiment with delivery channels that customers may in the end reject? And how does one choose from among the dizzying array of products and delivery options that big banks are promoting, like screen phones, personal computers, and the Internet? "You go on with your business day to day, and all of a sudden you look up and notice that you're missing a pretty significant happening," said John F. Poepl, chief executive officer of the Vermillion (Minn.) State Bank. A few community banks have become technological swashbucklers, but the majority echo Mr. Poepl's opinion. Check imaging and telephone banking have gained considerable popularity among smaller banks, but the jury is still out on most of the more advanced options. "I think most people are perfectly willing to sit back for a while," said Marvin H. "Mike" Potter, chief operating officer of a for-profit subsidiary of America's Community Bankers, a 2,000-member trade association. "People are waiting on the sidelines, saying, 'How do I make sure I'm not handcuffing myself to a particular device that may soon become obsolete?' " But interest in new channels has grown significantly over the last year, Mr. Potter said. More and more small-town bankers are reciting the mantra that technology can give small banks a hand in their effort to compete against bigger institutions. "It's the old analogy of turning around a canoe versus an aircraft carrier," Mr. Potter said. "Once it makes its decision, the community bank can move much more quickly." Among the small banks embracing technology wholeheartedly is Britton & Koontz First National Bank of Natchez, Miss. This $150 million-asset bank is investing $1.2 million in technology over the next two years. It has already made its mark locally by becoming the sole Internet provider in southwestern Mississippi. "Our bank has become the talk of the town," said W. Page Ogden, the president. In a town of only 20,000, Mr. Ogden said, 400 people have signed up for the Internet service the bank has offered since October. Subscribers immediately access the bank's Web site, which features a demonstration of an electronic home banking product Britton & Koontz plans to introduce this fall. "We plan to marry check imaging to our electronic banking product, so you'll be able to see the statement and the checks at home on the Internet," Mr. Ogden said. "You'll be able to take out a loan application or read messages from the president. Basically, it's another major communication device for us with the local community." Mr. Potter termed Britton & Koontz's investment "gutsy," and said most community banks are working on more modest efforts to prepare themselves for whatever "devices du jour" the future may bring. "If you keep yourself device-independent, make sure you're flexible enough to go into any device or any pipeline. I think that's clearly the winning strategy," Mr. Potter said. That's the strategy David Kern is implementing at Bank Independent of Sheffield, Ala., where his title is cyber bank manager. He said he has been charged with developing an electronic banking department that includes everything from automatic voice response to PC and Internet banking and cash management for businesses. First things first: the $250 million-asset bank is installing four ATMs. "Right now we're just talking," Mr. Kern said. "We just know it's coming. You have to lay the foundation." Bank Independent serves four towns in northern Alabama. Mr. Kern said a few customers use personal financial programs like Intuit's Quicken and Microsoft's Money, and the bank had hoped to provide a compatible PC banking product. But so far he has been frustrated trying to find a vendor that can deliver such a product. "It's not exactly feasible for a community bank to sign up with Quicken," Mr. Kern said.

Bank Independent is typical of the many community banks saying they are still in the research phase of electronic banking. "We're going to try to gather as much information as we can about all of the technology and then try to assess where we best spend our capital," said Mr. Poepl of Vermillion State. To date, Mr. Poepl's only hard-and-fast decision was to offer corporate customers electronic access to their accounts by computer. Beyond that, "We're going to see what the market wants and deliver it, but we're not going to be the ones who do the testing." Bankers in rural towns like Vermillion say they confront two countervailing forces while evaluating electronic banking. One is a relatively small base - computer-savvy farmers who, against the stereotype, are extremely facile with technology and know their way around computer networks. The other is the bulk of customers, who tend to be older and less involved with computing than their urban counterparts. Community bankers say the technology roots they lay down now will probably not sprout until the next generation grows up. "When the old customers die off, the young ones are going to take over and they're going to be used to using a lot of this computer stuff," said J.B. Blanset Jr., executive vice president of Citizens Bank and Trust Co. of Louisville, Miss. Mr. Blanset said the average age of customers at his $58 million bank is 50. Like many community bankers, he says his customers will be more receptive to banking through interactive televisions than through PCs. "I think TV banking in the long run will probably take the place of the PC, because so many more people can own a TV," Mr. Blanset said. He also sees profits in television banking. "I think you'll make more money off those folks," Mr. Blanset said. "The PC banking crowd isn't going to leave much money in the bank - they'll just use it for bill paying and keep the rest in investments." A Canadian credit union - Vancouver City Savings - has taken the lead in offering access through televisions. But members need a CD-ROM drive to use the service, which is still in a early phase. Another embryonic technology that Mr. Blanset said he was keen on is the smart card: "Convenience stores and service stations will like it, and I think it would cut down on robberies because people won't carry cash." But Mr. Evans, the skeptic from Twin City Federal sees a problem in that most stored-value cards do not display how much value is left on them, and the potential for "breakage and slippage" is great. As with travelers checks, he argued, many people may find they don't redeem all the value. "Who needs it? Life is too short for that kind of nonsense," Mr. Evans said. "Once again, it probably will come, but I'm not going to worry about it." Another channel that does not worry Mr. Evans is PC banking, which his bank has no immediate plans to offer. The bank has estimated that only 0.5% of its customers would use the service if it were available. "That may go up to 1%, but that is not persuasive," Mr. Evans said. Similarly, he has little use for the Internet, which he calls "not appealing" as a banking channel. By contrast, John A. Odenweller, vice president of technology and operations at United Bank and Trust of Tecumseh, Mich., said posting a Web page and offering PC banking will be his bank's first forays into electronics. "We want to give our clients more of an opportunity to bank many different ways, but we don't have the resources to be in these things first," said Mr. Odenweller. Mr. Odenweller said his $325 million-asset bank strives to be "a fast second" in the technology lane, taking its cues from larger banks and emulating what works. "Citibank went to voice response in 1988, and at the end of '95, they're into PC banking," Mr. Odenweller said. "At the end of '94, we went into voice response, and only a year and a half later, we're into PC banking. We can catch up quickly." Mr. Blanset concurred: "You let the big banks make all the boo-boos and you catch up on where they messed up."

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