I've very interested in learning why some community banks have had an almost aversion to new technology like Internet banking. What is the number one concern...cost? security issues? As Internet Product Manager for a national trade association I'm eager to learn how I perhaps provide better education to bankers so they are more likely to move towards "progressive banking". Any thoughts?

Lets look at it from the perspective of the owner.

It will cost me initially, it will cost me monthly, and I will have a hard time charging for this service, so there is virtually no income. I will lose money. The decision isn't hard so far.

Then there is the unquantifiable account retention number. That adds some to the equation. And while it will reduce telephone and teller traffic, it will not eliminate it and to an extent, may increase it; at least as it pertains to this subject and bill pay questions/problems.

Don't get me wrong, I am a proponent of technology and customer service. If you know me, you know this. Done right, this is the way to go. But it will not add significantly or directly to the bottom line unless your customer base is the right fit.

Sustainable growth has been seen in areas dealing more with stocks than with deposit accounts. There is a marrige here of customer services desired and the bank's needs, (deposits, fee income, market share, etc.).

With market saturation, online banking customers growth will slow, but it is still growth. About 2 years ago, one study tracked growth and found 3.2 million new online accounts, and 3.1 million terminated online accounts during the same period. Many of the programs are difficult to use and time consuming. The public believes everything is instant and easy. Those of us who've done this type of thing for awhile and understand it better, know that that is not the case.

This technology must be used right and targeted correctly, to provide maximum results for the banks. As technology grows and use increases with today's youth becomming tomorrow's consumer, this has to be the direction to go and the wants of the P&E customer will be more similar to those of the regular consumer. This increases demand. Supply will follow. But that can be a long time to wait for a return on today's investment.

As w prepare for a homebanking launch, remember, this is just my opinion.

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Andy Zavoina
Opinions stated are not necessarily that of my employer.

I Belive Mr.Zavoina said it all on The Internet Banking.
in our Area , Banks are hesitating to enter the New age of Internet Banking ,although The platform for such a digital intitive is Not accomplished as it should be.Maybe if we discussed Mr.Zavoina opinion on our Local financial newspapers...I belive Lots of Banks Here will re-consider and provide further studies and researches on including Internet banking among their services.it is More Like " We are getting into the 21th century High Tech. Rather than providing what really the market needs ! " That is what happening in our Area.

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Hussam Al-Abed
Amman - Jordan

We just launched our internet bank (minimal transactional ability; bill paying).

The biggest challenge was the big black hole known as information. Sure a bank can find/buy data concerning internet usage, but what we need is area-specific. Our marketing area is rural, 3-4 hrs from the nearest metro area, so any research we would have bought would have been custom-made, prohibitively expensive, and possibly clued our competitors to what we were doing.

I am still not comfortable that we've gotten all our questions answered concerning who will use our site and how often they'll use it.

The motivation for internet banking is not fee income - we accept that IB will probably be like ATMs, a service we have to provide to remain competitive, but nothing that has or ever will pay for itself.

Financial institutions are not realizing that they can use the internet to grow their organization via loans/deposits rather than simply implement another delivery channel and hope that people will show up to use it. At this point in time bankers are still mostly defensive in their implementation of Internet Banking rather than proactive. On the retail side FI's need to implement online banking to remain competitive - acquire and retain those profitable customers. Fee income can be generated via the commercial customer with online banking. For those of you who live in rural areas, your farmers are very sophisticated individuals and they can utilize the internet to check grain prices, futures etc., manage their accounts, pay bills - buy grain all before 7 am if they want, and they are. If your bank could go out and obtain 1-2 new commercial customers a month simply because you have internet banking and you show them the benefits, that will speak to your banks bottomline!

Good luck! It can be done. Do some reseach on your customers, their demographics and their use of electronic channels and those are the first customers you market to for online banking.

A follow-up question re Jav's lack of data:

What techniques and benchmarks are banks using to measure the success of websites? For those with interactive features (application forms, transactions, statements), your systems should generate useful statistical reports. For those banks with info-only sites, though, how do you document the level of customer awareness of your site? High levels of robot activity render hit counts almost meaningless. What other measures of awareness and activity can be used to make sound marketing decisions re growing the website?