"You're not in the money business. You're in the business of information about money."

by Frank Feather

Five years from now, ask any first grader where she keeps her weekly allowance and she likely will reply, "Why, on my Wallet-PC. Where do you keep yours?"

Because, by then, e-banking will be commonplace.

A brand new PC is switched on every 2 seconds in the United States, and every second worldwide. 40% of them go into homes. By 2001, the number of banks that offer home banking services will triple. The use of paper checks will drop 60%. And e-banking will multiply 40 times.

E-commerce will explode as security issues are solved and e-cash gains bank, merchant and public support. Our customers will gravitate to a secure system, one that is reliable, safe, secure, fast, and always available. In ten years some 25 million people will have converted to online banking, up from one million today. On an international scope, China will issue 400 million smart cards in the next five years-not even bothering to implement a check writing system for banking at all!

24/7
Secure digital banking is not very complicated. The main characteristics of a bits-and-bytes cyber-branch are no different than those found in a competitive bricks-and-mortar branch.

However, in terms of cyber-presence, when does the average American have time to think about finances? On nights and weekends-when the bricks and mortar bank is closed. People want to get help when they want it. We have to use technology to serve and sell customers 24 hours a day, 7 days a week. Suppose your customer is home on Sunday and just read something about refinancing a mortgage. He can go to his PC, connect to your bank and find out what you're offering in mortgages and calculate how much he might reduce his monthly payments. Ultimately he will merely hit the "y" key on his PC and sign up instantly.

Prepare to change
Whatever you believe about the future of banking, make sure your business vision is broad enough to adapt to dramatic and rapid change. Denial of e-banking as a big business, without monitoring and anticipating how its security issues are being resolved, will leave you badly exposed. In short, operate in Internet time. Otherwise you're toast.

"Is my money safe?"
In banking, confidence is everything. In e-banking, e-confidence is paramount. Consumers will want to do cyber-banking with an institution they know and trust-and they trust the institution they already know and use. Control in-house is an important issue-keeping customer data safe; restricting system access; using an intranet for the most sensitive data; making sure employees change passwords often and log off on a daily basis.

Cyber-security means being as safe as the customer requires (not as safe as you require) and protected from cyber-anarchists. The customer doesn't want to hear about encryption, or public and secret keys, or digital signatures. What he wants to know is, "Is my money safe?"

Good security will foil most hackers and malcontents because they rely on you NOT doing the right thing. The basics of good security, as ever, are good people and good processes. Technology won't help a bank that won't take basic security precautions, or that has poor management. Yet, of 660 bank web sites recently surveyed, almost 70% lacked security!

A Yankee Group study shows 85% of top banks plan to have Net-based services by 1999. They'd better focus on basic security before they do anything else. E-banking entails much more than simply throwing up a web page.

Safer Than Credit Cards
Actually, Web transactions are inherently safer than others because they minimize human contact, which reduces the risk of fraud. Use your credit card, and chances are a copy of the charge with the number and your signature can be left lying about. Call a direct marketer or a bank, and you give sensitive information over a standard phone line that can be tapped.

Web transactions are actually safer. Do a Web transaction that works with digital certificates with public key cryptography, and it is similar to accessing a bank safe deposit box, where the bank and the customer each have a key, both of which are needed to open the box. Users get a unique pair of public and secret keys and encrypt messages using the public key. Digital signatures thus enhance privacy, hide user identity, and maintain proof of authenticity. This allows e-money to be as anonymous as paper money, spendable only once, and only by its holder.

Neither you nor the customer actually has anything to do with all this-it's done during the transaction. What it does, however, is let you say to the customer, "Yes, your money is safe."

People must feel protected against fraud-fraud against them, their transactions, their information, and their institution. Web privacy, database integrity and accuracy must be absolute.

Value-added cyber banks must become part of the customer's home or lifestyle. A personalized on-line experience and relevant content are the essential "bits-and-bytes" of a successful cyber branch.Smart cards and WalletPCs will be a big part of database marketing. Most banks don't have a clue who their customers are. Name and address don't cut it. MCIF files must form a biographical database that gives real-time client profiles to facilitate secure one-to-one personalized marketing of virtual mass-customized financial services. Such relationship banking is the key to repeat business and long-term profits. They help you make each customer feel like "the only person in the world."

We've already entered the era of cyber-banking. You're not in the money business. You're in the business of information about money.

Banks that redefine their business model and embrace e-banking have a fabulous future.

The rest will vanish.

Frank Feather is President of Glocal Marketing, Inc. in Ontario, Canada. He is the author of THE FUTURE CONSUMER: Personal Shopping & Customer-Centered Marketing on the Information Superhighway. One of his quick descriptions of today's environment-"My Mother won't use an ATM. I use one most of the time rather than go to the bank. My daughter thinks the ATM IS the bank." Frank can be reached at (905) 642-9090.

Copyright © 1997 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 7, No. 4, 3/97