More Banks Offering Online Services to Customers

Community banks continue to invest in technological tools and applications that provide value to customers and increase operational efficiency, according to the Independent Community Bankers of America (ICBA) and Infinet Resources.

The survey identified Internet banking, digital check imaging, equipment purchases, network issues and software upgrades as the top five technology decisions bankers will face in 2002.

The survey was sent to community banks nationwide, and found that 87 percent of community banks will offer customers Internet banking by 2003. Currently, nearly half of all community banks allow customers to view account balances and transfer funds online, and one-third of community banks allow customers to view and print statements online. Approximately 40 percent of the banks surveyed allow customers to electronically pay bills.

According to the survey, 40 percent of community banks offer a form of check imaging, while 46 percent plan to invest in the technology within 18 months.

“The banking industry’s focus on online banking, check imaging and bill payment show us that the trend is to move consumers to more of a self-service banking model,” said Dewite North, ICBA’s community bank technology manager.

Other findings from the survey show that 84 percent of community banks have a local area network, and 63 percent have a wide area network. Only 13 percent of the banks surveyed have a technology-based customer relationship management program, but almost half plan to evaluate that technology in the next year.

According to a report by Celent Communications, virtually all major and second-tier banks (banks with at least $30 billion in assets) have implemented transactional Internet banking. Applications included in these platforms include online bill payment, electronic bill presentment and payment (EBPP), account aggregation and online lending.

The fall of the Internet economy has caused some firms to re-evaluate their Internet offerings, however, questioning their monetary benefits. Financial institutions in particular are questioning whether their current and expected online applications will indeed lead to profitability or if the institutions instead fell victim to the dot-com era of overly optimistic expectations.

The Celent report also discovered that financial institutions that implement a comprehensive suite of Internet banking products can expect to reap significant rewards, especially in their areas of cost savings and customer retention.

“Banks are discovering that active users of their online banking services are much less likely to jump ship to another institution,” said Neil Katkov, co-author of the report. “A rich Internet banking platform improves not only the stickiness of the site, but more importantly, the stickiness of the bank itself.”

Celent predicts that a comprehensive online banking platform can increase the value of an active online customer by 25 percent.