• Online Banking Vendors chart

Even in the foothills of Arkansas’ Ozark mountains, Internet banking can find a home. Arneita and Tyrell Patton depend on it to make their lives simpler.

The Pattons live in Mountainburg, a town of 488 people. It’s not Silicon Valley, but some mountain folk are pretty savvy when it comes to on-line banking. In fact, the Pattons chose Bank of the Ozarks primarily because it offered them banking via the Internet.

"My husband does a lot of travelling in-state, and our sons had jobs at a camp up North in Jasper," says Ms. Patton. "We were spread out across the state and we needed something to make managing money easier."

And that is why banks big and small are finding it vital to provide on-line banking services. The issue is how to do it, and the amount to be spent.

A U.S. Banker survey of 100 banking companies with assets between $1.9 billion and $739 million indicates that most of them offer Internet banking simply to keep up with the times. But some said they see the Internet as a necessity for their business.

The banks surveyed rely on a handful of software companies to run their Internet banking operations. The banks with online banking use a total of 15 different software providers.

S1 Corp. in Atlanta, and Jack Henry & Associates of Monett, MO, are the leading providers. (See table below.) S1 provides 18 banking companies with its Internet banking products, while Jack Henry & Associates has engagements with 13.

While the great majority offer on-line banking, two do it internally. Only four contacted did not offer the service to their customers.

"In some of the towns we service, customers don’t have cable television or a daily newspaper," says Randy Oates, director of communications for Little Rock-based Bank of the Ozarks. "You might think people in rural areas aren’t interested in online banking, but they’re already on the Internet getting things like news and weather reports. The Internet for these people is their window to the world," he adds. "Enabling these customers to do their banking from home makes a lot of sense."

Many community banks said getting into the Internet banking game quickly was a top priority. Outsourcing provides a quick fix for small banks looking to compete with larger players, and is less expensive than developing a homegrown banking platform.

In metropolitan regions, as in rural ones, most small banks said offering Internet banking was a must.

Internet Banking
Company
Engagements 
S1
18
Jack Henry & Associates
13
Digital Insight
8
Metavante
6
Fiserv
5
Information Technologies
4
Netzee
4
Online Resources
3
Regency
3
Equifax
2
Data Pro
1
Alltel
1
Pierce EFT
1
Funds Xpress
1
Phoenix International
1
(6 banking companies)
none
(2 banking companies)
custom
Total
79

"Our customers tend to be technology savvy and demand Internet banking," says George Schwartz, treasurer and senior vice president of Boston Private Financial Holdings. "And we, also, wanted to have competitive services."Boston Private launched its Internet banking operations in September 1999. After looking at several Internet banking vendors, Boston Private selected Qup because the bank found it easy to use and fairly priced. Qup was acquired by Atlanta-based S1 Corp. in April 2000.

Schwartz says bank customers have been pleased with the product and that it is used by 27% of its customers. According to the Needham, MA-based TowerGroup, between 17% and 19% of most bank customers bank on-line.

Other small banking companies in heavily populated regions, such as Bancorp Rhode Island, which owns Bank Rhode Island, offer Internet banking to compete with larger regional banks. Jim DeRentis, senior vice president of retail banking and marketing, says Internet banking helps the bank overcome regional "distribution issues," such as a limited branch network.

FleetBoston Financial Corp. and Providence-based Citizens Bank are Bank Rhode Island’s primary competitors, says DeRentis. Fleet has almost $180 billion in assets, and Citizens has $8.3 billion in assets.

Both organizations are offering their customers a number of online services, including Internet banking. Bank Rhode Island, with $814 million in assets, and 13 branches in the Providence area, says it needed to "broaden its product mix" to remain competitive with Fleet and Citizens.

Since deploying its Internet banking in March of 2000, the Bank of Rhode Island says it has seen the number of online banking customers grow consistently, but declined to give out numbers.

Online Banking Vendors
Used by banks with assets ranging between $1.9 billion and $739 million
Banking Company
Assets ($M)
Provider
GBC Bancorp, Los Angeles
1,969
ITI
Independent Bank Corp. Rockland, MA
1,949
S1 Qup
Harleysville National Corp., Harleysville,PA
1,935
Jack Henry
Sterling Bancshares, Inc., Houston
1,925
in-house
Mississippi Valley Bancshares, St. Louis
1,888
S1 Qup
U.S.B. Holding Co., Inc., Orangeburg,NY
1,886
S1 Qup
Simmons First National,* Pine Bluff, AR
1,865
Jack Henry
CPB Inc., Honolulu
1,816
Digital Insight
Mid-America Bancorp, Louisville, KY
1,803
S1 Edify
Independent Bank Corp., Ionia, MI
1,783
none
Sandy Spring Bancorp, Inc., Olney, MD
1,773
Metavante/Brokat
F&M Bancorp,* Frederick, MD
1,763
Netzee
First Financial Bankshares, Abilene, TX
1,753
 
Oriental Financial Group, Rio Piedras, PR
1,747
 
Hamilton Bancorp Inc.,* Miami FL
1,732
Data Pro
CB Bancshares, Inc., Honolulu
1,721
 
Frontier Financial Corp., Everett, WA
1,690
Equifax
Sterling Financial Corp.,* Lancaster, PA
1,668
 
Century South Banks, Inc., Alpharetta, GA
1,643
 
Capitol Bancorp Ltd., Lansing, MI
1,630
 
Yardville National Bancorp, Hamilton, NJ
1,619
 
First Merchants Corp.,* Muncie, IN
1,600
Alcatel
BancFirst Ohio Corp., Zanesville, OH
1,559
S1 Qup
Second Bancorp, Inc., Warren, OH
1,546
S1 Qup
Capital City Bank Group, Tallahassee, FL
1,527
Online Resources
Commercial Bank of New York, New York
1,526
 
Republic Bancorp, Inc., Louisville, KY
1,508
Digital Insight
Columbia Banking System, Inc., Tacoma, WA
1,500
S1 Qup
Main Street Bancorp, Inc., Reading, PA
1,496
Jack Henry
Midwest Banc Holdings, Melrose Park, IL
1,467
Jack Henry
MB Financial, Inc., Chicago
1,458
 
Mid-State Bancshares, Arroyo Grande, CA
1,455
S1 Qup
CCBT Financial Co., South Yarmouth, MA
1,403
ITI
IBERIABANK Corp., New Iberia, LA
1,396
Jack Henry
First Busey Corp., Urbana, IL
1,355
S1 Edify
West Coast Bancorp, Lake Oswego, OR
1,354
Digital Insight
Tompkins Trustco, Inc., Ithaca, NY
1,304
S1 Qup
Eldorado Bancshares, Laguna Hills, CA
1,297
 
Financial Institutions, Warsaw, NY
1,289
Jack Henry
Sterling Bancorp, New York
1,270
 
USBANCORP, Inc., Johnstown, PA
1,254
none
First Oak Brook Bancshares, Oak Brook, IL
1,249
Jack Henry
Washington Trust Bancorp, Westerly, RI
1,218
Digital Insight
Peoples Holding Company, Tupelo, MS
1,212
Metavante
Farmers Capital Bank Corp., Frankfort, KY
1,204
 
Southwest Bancorp, Stillwater, OK
1,203
S1 Qup
National City Bancorp., Minneapolis, MN
1,192
none
Indiana United Bancorp,* Greensburg, IN
1,174
 
Old Second Bancorp, Inc.,* Aurora, IL
1,168
Jack Henry
Seacoast Banking Corp. of Florida, Stuart, FL
1,151
Metavante
VIB Corp., El Centro, CA
1,143
Regency
Peoples Bancorp Inc., Marietta, OH
1,135
S1 Qup
Allegiant Bancorp, Inc., St. Louis, MO
1,135
S1 Qup
Great Southern Bancorp, Springfield, MO
1,130
Jack Henry
Patriot Bank Corp., Pottstown, PA
1,124
Digital Insight
Community Banks, Inc., Millersburg, PA
1,121
Regency
Omega Financial Corp., State College, PA
1,113
Fiserv
Southside Bancshares,* Tyler, TX
1,100
S1 Qup
Century Bancorp, Medford, MA
1,083
 
Arrow Financial Corp., Glens Falls, NY
1,081
Pierce EFT
State Financial Services, Hales Corners, WI
1,080
 
Lakeland Financial Corp.,* Warsaw, IN
1,080
Fiserv
German American Bancorp, Jasper, IN
1,079
Equifax
First Banks America,* Clayton, MO
1,070
 
Glacier Bancorp, Kalispell, MT
1,056
Jack Henry
UNB Corporation, Canton, OH
1,053
 
Suffolk Bancorp, Riverhead, NY
1,049
London Bridge
Banc Corporation, Birmingham, AL
1,029
 
State Bancorp, New Hyde Park, NY
1,021
None
First M & F Corp., Kosciusko, MS
1,019
 
Camden National Corp.,* Camden, ME
1,011
 
NBC Capital Corp., Starkville, MS
1,009
 
Main Street Banks, Kennesaw, GA
1,008
Netzee
TriCo Bancshares, Chico, CA
972
Homegrown
First National Corp.,* Orangeburg, SC
955
ITI
Granite State Bankshares, Keene, NH
955
Jack Henry
CNB Financial Corp., Canajoharie, NY
951
 
Fidelity National Corp., Atlanta
948
S1 Qup
Three Rivers Bancorp, Monroeville, PA
947
 
Hanmi Financial Corp.,* Los Angeles
946
Netzee
First Bancorp,* Troy, NC
928
 
Boston Private Financial Holdings, Boston
921
S1 Qup/Checkfree
PennRock Financial Services, Blue Ball, PA
910
Jack Henry
Lakeland Bancorp, Oak Ridge, NJ
906
S1 Qup
Union Bankshares Corp., Bowling Green, VA
881
 
Premier Financial Bancorp,* Georgetown, KY
876
None
S.Y. Bancorp, Louisville, KY
852
Funds Express
First United Corp., Oakland, MD
846
Fiserv
Centennial Bancorp,* Eugene, OR
831
Online Res.
PrivateBancorp, Inc., Chicago, IL
829
Metavante
Bank of the Ozarks, Inc., Little Rock, AR
826
S1 Qup
ABC Bancorp,* Moultrie, GA
812
Netzee
Columbia Bancorp, Columbia, MD
812
Metavante
Drovers Bancshares Corp., York, PA
796
ITI
LSB Bancshares, Lexington, NC
796
Fiserv
Capital Crossing Bank, Boston
771
Metavante
Interchange Financial Ser., Saddle Brook, NJ
769
 
Merchants Bancshares, Burlington, VT
746
Digital Insight
Sun Bancorp, Inc., Selinsgrove, PA
743
 
Bancorp Rhode Island, Providence, RI
739
Digital Insight
*Thrift institution, all others are banks Source: U.S. Banker survey


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