Money net Featured

9:50am EDT July 22, 2002

As the Internet storms raged across markets and industries, fundamentally changing the way companies do business, most banks, especially smaller community institutions, stood on the sidelines.

Banks, conservative by nature, weren’t sure what the Internet meant to them, and so they stood to the side until they were sure it wasn’t just a passing fad.

“They understood the Internet as an information source, but they didn’t quite know where they fit in,” says Greg Constantine, vice president of FISI-Madison Financial, a provider of marketing strategies for financial institutions. The majority of banks now have Web sites, but they are primarily “brochureware,” offering basic information about the bank.

Many are focusing on making their sites transaction-based, where customers can transfer funds, pay bills and view which checks have cleared.

“In the next few years, all banks will have that,” says Constantine. “It will not differentiate the banks anymore than an ATM network does. What the banks need to focus on is content. They need to ask themselves, ‘What else can we do to bring them back to the site and simplify their lives?’”

Constantine says banks need to offer not only products such as auto loans online, but associated services as well. Consumers should be able to pull consumer report information off the bank site or even get help matching them to the car they are looking for.

“They need to close the circle and offer the consumer everything they possibly need to purchase a car,” says Constantine. Mortgage offerings would include loan applications, house finding services and moving information. “They’ll catch the customer before they even get into town.”

One thing banks have to be cautious of is linking to other sites. A bank that provides a link to a site with car information could discover a major competitor has an ad there that might take their customer away from them. The more information that is imbedded directly in the bank’s site, the more it can control the branding of the product.

This may mean forming partnerships with content providers to get the necessary information. Some banks are still struggling with what their Internet strategy will be: Do you go after local business, or do you try to expand your account base with deposits from around the country?

“Whatever strategy you go with, you have to analyze it from every view point and decide what you want to be,” says Constantine. “Is the Internet site going to be a delivery channel or a separate bank? Once you know what you want, you can form partnerships to bring in pieces of the plumbing you can’t do on your own.

“The Internet is not a matter of when the train is leaving the station. The train has left, and banks are trying to catch up to it. Some can’t afford to keep waiting.”

How to reach: FISI-madison, or (615) 371-2763

Todd Shryock ( is SBN’s special reports editor.