ANALYSIS: Weekly Web Watch - Online banks revolutionize the management of your money

Banks, as we saw in this column last week, are scrambling online in a bid to expand their customer bases. In some cases it’s simply to hold onto the customers they have. Research company Jupiter Communications (www.jup.com) reckons there were 7.1 million US households doing some sort of banking online at the end of last year, about 8% of banking households.

Banks, as we saw in this column last week, are scrambling online in a bid to expand their customer bases. In some cases it’s simply to hold onto the customers they have. Research company Jupiter Communications (www.jup.com) reckons there were 7.1 million US households doing some sort of banking online at the end of last year, about 8% of banking households.

Banks, as we saw in this column last week, are scrambling online in

a bid to expand their customer bases. In some cases it’s simply to hold

onto the customers they have. Research company Jupiter Communications

(www.jup.com) reckons there were 7.1 million US households doing some

sort of banking online at the end of last year, about 8% of banking

households.



Jupiter expects that to grow to 30% in five years. But as they move

online, funny things happen to banks. They start to look less like the

banks we’re used to, those solid piles of concrete with imposing

doorways and fake marble frontages that dominate Main Street in most

towns.



Banks are traditionally arrogant. The ’banking hours’ culture, where

even the phone lines close at 5pm and where customers must wait until

the end of each month to see their account statements, is what many of

us have come to expect. How refreshing, then, to go online and see this:

’Ever wonder how much you’ve paid a vendor over the past year? Or how

your current utility bills compare to prior months? Or where you spend

your disposable income? Our built-in reports answer all of these

questions with just a click of your mouse!



’View all of your account balances from one screen; balances that are

typically updated within 24 hours ... All deposits, electronic bill

payments, ATM/debit withdrawals, and interest earned are automatically

listed on your online statement. Our Register even shows you the

electronic bills you have paid that have not been cashed. You can even

view your pending bills for a complete financial overview.’



This is all from Telebank’s site (www.telebanc.com). In fact,

information is one of the areas of service where most traditional banks

fall down.



But Telebank is not a traditional bank at all. It has no physical

branches.



By providing its services over the Net, by phone and through ATMs, it

can avoid the cost of a branch network and pass those savings on to

customers.



And it can provide a much higher level of service than traditional banks

are used to providing.



Telebank is owned by E*Trade, the second biggest Internet

stockbroker.



One of the things the Internet does is to open banks up to competition

from quarters they would never have expected. You don’t even have to

have a name in financial services to be a bank these days. Back in July,

retail giant Wal-Mar filed with federal regulators to buy Federal

BankCentre, a small bank based in Oklahoma. There are lots of reasons

other than the Internet why Wal-Mart might want to do this, but such an

acquisition would open up the possibility of a nationwide Wal-Mart

discount Internet bank.



You don’t have to be a retail giant to be interested in being a

bank.



According to a report on ZDnet (www.zdnet.com) last month, Ford, BMW,

British Airways and no fewer than 35 insurance companies have all

applied for banking charters. Any one could be just as good at it as a

traditional bank. Most will probably be better.



In fact, with online users, it is quite likely that traditional banking

names will be far less attractive and prompt far lower service

expectations than pure e-commerce names - a Yahoo!, say, or an E*Trade.

If you go to Wingspanbank (home.wingspanbank.com), launched in June,

you’ll see this: ’Wingspanbank is here to help in ways no traditional

bank can ... If your bank could start over, this is what it would be.’

The irony of course is that Wingspanbank is the child of Bank One, the

fifth largest bank in the US.



A traditional bank has indeed ’started over.’



Stovin Hayter is editor of Revolution. All e-mails should be sent to

stovin@revolution.haynet.com.



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