Future Banking: Online, Down Home

Corrections or additions?

These articles by Melinda Sherwood and Patrick J. Walsh were published in U.S. 1 Newspaper on August 25,

1999.

Future Banking: Summit Bank

@BIG LETTER = Internet-driven banking services like online bill

payment

and presentment are changing the way many customers do banking, and

for the mega-banks it is quickly becoming the holy grail. But should

every bank make E-commerce the No. 1 priority of its strategic

planning?

Peter Halstead, executive vice president of Summit Bank,

believes

that technology-driven banking may not be as much of an imperative

for mid-size and community banks. "There are banks that give that

service, and that’s laudable," he says. "But they don’t have

the personal touch to deliver it on the ground level, because they

don’t have somebody there. They offer the generic services, and try

to get to you by mail, but they don’t know you."

On that basis alone, Summit — despite its name — is not trying

to be the king of the mountain. "We’re in the middle," says

Halstead. "We’re trying to reach down and cater to the people

below, and reach up to where the big banks do well. We have to put

our energies and our time into what our customers are asking for.

We want to deliver services anyway the client wants it. You want to

walk down to the branch, fine. Do you have a telephone? We’ll do

telephone

banking. Do you have a PC? We’ll do PC banking."

And that may be exactly what Halstead envisions as the "The 21st

Century Bank: The Proper Partner in Every Trade," a topic on which

he speaks Thursday, September 2, at the Doral Forrestal at 11:30 a.m.

The meeting is part of the Princeton Chamber’s general membership

meeting, and will coincide with the Chamber’s Business Trade Fair

and U.S. 1 Technology Showcase, also at the Forrestal between 11 a.m.

and 5 p.m. Call 609-520-1776 to make $28 luncheon reservations. See

the registration form on page 4 of this issue to reserve a free seat

at the U.S. 1 Technology Seminar, which begins at 4 p.m.

This is Halstead’s 28th year working for Summit Bank. He has a BS

in economics and finance from Colgate, Class of 1964, and spent his

first five years at First National Bank of Princeton.

Summit Bank already offers an array of Web-based services for

businesses

and personal bankers, such as cash management over the Internet and

wire transfers using the PC. Web-based bill payment service is

available

to personal bankers for free. Businesses, however, must pay a $100

set-up fee, plus a minimum of $10 a month to use the WEBConnect

service,

which allows direct deposits, stop payments, and any other kind of

transaction. (See page 9 for the story on Paytrust.Com, an Internet

bill paying service and additional comparisons of online banking

charges.)

"The real issue is to be able to send all invoices out over the

Internet, and get all the payments the same way, and we’re moving

towards doing that," says Halstead. Bill presentment is still

a year or so down the road, says Halstead, but that’s O.K. for

Summit’s

clientele. "Use of the Internet is still modest among mid-market

business," he says. "The big corporations have a huge

potential

savings there, and maybe sometime we’ll be catering to that area."

If the customers eventually do want it all, how will Summit keep up

with bigger banks that already have all the online bells and whistles?

It doesn’t have to, says Halstead, because it has something that those

banks do not: character. "They loved us when we were a $500

million

bank," says Halstead, "but when we were a $34 billion bank,

there were people who would do without with the `services’ just to

shake the president’s hand. We’re trying to reach down and get some

of the old market that we came from," i.e the community banks

that were merged into the larger organization.

"We’re trying to keep up with the technology and make cautious

decisions," he says. "It could be that these big corporations

may want it but they may not buy it from us anyway.

"When this all shakes out," says Halstead, "there are

going to be a lot of clients that are going to go to a small local

bank. A lot of banks will spend money and three years from now it

will end up being overspending. E-Commerce will be a big issue for

everyone, but hopefully we’re doing it at the right pace."

Top Of Page
Future Banking: Online, Down Home

by Patrick J. Walsh

It’s likely that your employees use online tools

to help them manage their personal finances. They would undoubtedly

welcome the flexibility of tracking their employer-sponsored savings

or retirement plan assets online whenever and wherever it’s convenient

for them.

Employers increasingly are using intranet or Internet websites to

allow employees to access their employer-sponsored savings and

retirement

accounts and other benefits programs. Merrill Lynch’s 10th annual

survey of employers and benefits managers, conducted in 1998, found

that 15 percent of companies use intranet or Internet websites for

this reason, a figure that has almost doubled in the last two years.

Here are a number of ways companies are using their websites to

provide

access to their 401 (k) plan or other retirement plan, automatic

saving

plan, employee stock ownership plan, stock option program, and health

or flexible spending accounts:

Enrollment. A good way to increase participation is to

make the process easy. You can use your website to allow employees

to enroll in a plan, make changes in their enrollment status, and

choose or change a PIN number.

Account management. If you offer a number of different

investment options, you can supply information such as descriptions

of mutual funds and performance data, to help employees make specific

investment choices. Even more valuable, you could offer employees

the opportunity to transfer funds between investment options.

Market data. Plan participants who self-direct their

investments

find current market information helpful when deciding when to make

changes in their portfolios. A useful part of your online capabilities

could be to supply stock quotes, intra-day market index movements

and news.

Financial planning tools. A website is an ideal place

to offer information about overall retirement and financial planning.

Your educational section could offer basic information about investing

and financial management. With modeling tools, you could allow

employees

to create "what if’ scenarios to help them make goal-based

decisions

about their investments, compare mortgages, or consider the impact

of loans against their 401 (k) plan.

Access to assistance. Even with online access, employees

will need additional information or help on occasion. Through your

website you might offer the opportunity for employees to submit

questions

via E-mail, or include a telephone number for employees to call to

reach service representatives.

Companies are using online access to benefits information to

help meet a wide range of challenges in their retirement plan

education

efforts. CoBank, an international agricultural bank cooperative based

in Englewood, Colorado, that uses Merrill Lynch’s BeneOnLine

service, has 10 domestic and two international sites. They’ve found

that a central, technology-based source of information is critical.

"The ability to access our CoBank 401(k) information through (the

service) has been very positive with our employees," said Carla

Hueckstaedt, CoBank’s technical training manager. "Our employees

are excited about being able to monitor their investments from their

office or home."

Providing online access to benefits information for your employees

can ease the demand on your benefits manager or human resources

personnel.

But online access can’t replace the personal touch. Used in

conjunction

with financial planning and investing seminars or personal

consultations,

online access to benefits information can help your employees better

manage their employer-sponsored saving and retirement plans.

Patrick J Walsh is senior vice president and director, Group

Employee Services, for Merrill Lynch.


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