WWW.Isyourbankontheweb?.Com & Whyareyouthere@all?

It is as though someone had combined the irresistible, landscape-changing force of a glacier with rocket engines: The World Wide Web has become part of the norm in doing community bank business in so short a period that it boggles the mind. Nearly two thirds -- 65.6%--of the nation's community banks have websites, according to the latest survey, and more planned to by the end of 2000, as shown in Exhibit 1. right. In the very first competitiveness survey, the 1997 edition, only 22% had websites. The latest results represent an increase of 198% in five years. It's hard to think of anything in modern banking that compares for rapid implementation that wasn't required by legislation or regulatory order. Of course, having a website means different things in different banks. Some community banks have full-service websites that will absolutely knock you out with their graphics and the services offered. Others are sheer brochure ware-basic information only. Along with a rate of implementation that has turned a novelty into normality, comes what should be a sobering truth: As of now, having a website makes your bank no more special than having a branch makes your bank anything special. With the maturing web marketplace has come the obligation to have some idea of why your bank jumped onto the web and where it fits into your strategy for the future. During a strategy-swapping session at ABA's National Conference for Community Bankers, held in February, a banker stood at the audience floor mike and said, with an air of resignation, something along these lines: Just once, I'd like us, as an industry, to come up with something new that actually makes us money. We invented drive-up banking, built it, and now everybody expects it, and we get nothing for it, except expense. We adopted ATMs, and still, for a lot of us, this is just another expense. Now there's websites--more things we can do and not make anything with. Murmurs around the room indicated that this fellow wasn't alone in his sentiment. Indeed, it is still a subject of debate whether a bank's website is simply another channel for doing business, as some bankers maintain, much like a branch or ATM, or whether a website is a product unto itself. What one can say with confidence is that the hard work of the web is just beginning for community banks. Now, the web must be managed as a business, or, rather, as an integral part of the bank's business. The time of getting extra credit just for showing up is gone forever. With this in mind, we set out in this companion to the latest competitiveness survey to probe community banks on the web as a business line. The structure of this report is based on that concept. Web Strategy A key question is what has brought banks onto the web. We asked bankers why they had done it. Were they countering the moves others had made? Were they trying to be pioneers? Exhibit 2. above left, shows the range of answers. While the split between the three alternative choices isn't even, it is interesting to see how close, relatively, they are. For about a third, going onto the web was an offensive move. For a bit less than that, it was a defensive move. For a bit more than a third of the banks, the web was explored as an alternative channel for customers to use--much as a bank would want to set up a branch if a new subdivision were built on the outskirts of town. Exhibit 3, top. explores the depth and sophistication of bank sites. Nationally, there is nearly a 50-50 split between banks with transactional sites (those that permit customers to do some degree of active business, rather than simply obtaining general information about the bank) and nontransactional sites. The group of banks that have transactional abilities on their sites has grown over past surveys. As has the depth of offerings, as seen in Exhibit 4. …